Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

PRIVATE BUSINESS

BRITISH RAILWAYS (No. 4) BILL (By Order)

BRITISH WATERWAYS BILL [Lords] (By Order)

CROSSRAIL BILL (By Order)

EAST COAST MAIN LINE (SAFETY) BILL (By Order)

GREATER MANCHESER (LIGHT RAPID TRANSIT SYSTEM) BILL [Lords] (By Order)

WOODGRANGE PARK CEMETERY BILL [Lords] (By Order)

RIVER HUMBER (UPPER BURCOM COOLING WORKS) BILL [Lords] (By Order)

Orders for Second Reading read.

To be read a Second time on Wednesday 16 December.

Oral Answers to Questions — NATIONAL FINANCE

Premium Bonds

Ms. Quin: To ask the Chancellor of the Exchequer what representations he has received about the conditions governing the purchase of premium bonds by individuals.

The Economic Secretary to the Treasury (Mr. Anthony Nelson): I have received a number of representations concerning the purchase of premium bonds.

Ms. Quin: Do the Government accepted that the sale of premium bonds has plummeted since they changed the rules so that £100 became the minimum amount that one could purchase? Does that not penalise many people who would like to buy bonds in small amounts for themselves or as presents? Are the Government trying to kill off the premium bond scheme altogether?

Mr. Nelson: I acknowledge the need to encourage the savings ethic, but it is also important to ensure that the taxpayer's interests are protected. The cost of administration is considerable and that change, associated with the other changes to National Savings bank accounts, will save the taxpayer about £5 million a year.

Mr. John Greenway: Does my hon. Friend agree that if we want to encourage the savings ethic among young children, it is important that they learn what is a realistic return on the investments made on their behalf? A return

based on a computer deciding whether they have won a cash prize seems totally artificial and unrealistic. Would it not make more sense if young children invested in National Savings certificates?

Mr. Nelson: I am bound to agree with my hon. Friend. Rather than rely on the luck of the draw, it is better for a young saver to build up savings that have an assured rate of return. After March, the odds of winning will be 15,000:1, but the rate of interest applying to savings certificates will be about 5 per cent.

Investment (Tax Relief)

Mr. Wareing: To ask the Chancellor of the Exchequer what plans he has to introduce further tax relief incentives for United Kingdom-based manufacturing firms investing in the United Kingdom.

The Paymaster General (Sir John Cope): The existing tax relief for capital investment allows appropriate write-offs. The measures announced in the autumn statement will give additional encouragement to investment in the year to October 1993.

Mr. Wareing: Is the Minister aware that between 1987 and 30 June this year, no fewer than 24,725 manufacturing concerns went into liquidation? What could the Government have done? Does the right hon. Gentleman believe that they could have done anything to prevent those bankruptcies? Is he aware that, although reductions in interest rates are welcome, confidence is needed? Until unemployment is reduced, there will be no confidence, no demand and no inducement to invest.

Sir John Cope: Measures were introduced by my right hon. Friend the Chancellor in the autumn statement to deal with those problems. The measures were widely welcomed and, on investment and other matters, responded to the calls made by industry.

Mr. Bill Walker: My right hon. Friend will be aware that one of the finest industries in Scotland is the Scotch whisky industry, which contributes massively to the Exchequer through excise duties and value added tax and produces more than £1,700 million worth of exports a year. Will my right hon. Friend give serious consideration to the proposal that, rather than the present system, excise duty should be levied on the alcoholic content of the product? That would help negotiations in Europe, increase revenue intake for the Treasury and give substantial help to the Scotch whisky industry.

Sir John Cope: I am, indeed, aware of the importance of the Scotch whisky industry, from what my hon. Friend and other hon. Members have told me about it, from what I have been told by the Scotch Whisky Association and from my own appreciation of it. I note my hon. Friend's comments and assure him that we consider everything carefully in the approach to the Budget, but I could not possibly anticipate my right hon. Friend's Budget statement. My hon. Friend will also be aware of the disadvantages, from our point of view, of the system he suggests.

Ms. Harman: Is the right hon. Gentleman not concerned by the fact that his Department's monthly monetary report, issued today, shows that manufacturing employment fell in September by 32,000 and that the rate


of job loss in manufacturing is accelerating? Is it not time that the Government recognised that unemployment is not just, as they call it, a lagging indicator but is now in itself a cause of the continuing recession, which is why the Government must take action on unemployment?

Sir John Cope: The proportion of output from manufacturing has been declining for a long time not just in this country but far more widely. Investment in plant and machinery, which is part of what is needed, is already increasing and productivity is at a record level. That is what we need and what the autumn statement encouraged.

Interest Rates

Mr. Sykes: To ask the Chancellor of the Exchequer which EC countries have lower short-term interest rates than the United Kingdom.

The Chancellor of the Exchequer (Mr. Norman Lamont): None. The United Kingdom has the lowest short-term interest rates in the European Community.

Mr. Sykes: I am grateful to my right hon. Friend for that reply. Is he aware that in Scarborough and Whitby, England's two finest resorts, we have many successful companies, such as McCain Foods makers of oven chips, and Pindar Graphics, and that interest rates and exchange rates are so competitive that great British companies such as those are winning orders hand over fist at home and abroad?

Mr. Lamont: I am sure that my hon. Friend's constituency is typical of many that are benefiting from the reduction in interest rates. That is being reflected in high streets throughout the country. Retail sales in the last three months are up 1 per cent. on the previous three months and are the highest since 1990. In the car industry—it is not so strongly represented in my hon. Friend's constituency, although car retailers are—we have also seen an increase in recent months. There is no doubt that the economy is benefiting from the reduction in interest rates, which I believe will work through increasingly into other parts of the economy.
The key consequence of the reduction in interest rates is through mortgage rates. There have already been substantial reductions in mortgage rates, but many people, particularly those with annual mortgages, have yet to see—they will do so early in the new year—further, very substantial, reductions in their mortgage rates. That will help consumer spending very considerably.

Mr. Beith: Does the Chancellor accept that lower short-term interest rates, although welcome, are not likely to have as rapid an impact on the economy as, for example, contracts held by companies that benefit from increased spending on public works? Does he recognise that many small businesses do not have confidence that interest rates will remain low and that they are at a disadvantage compared with businesses in many other European countries, because they are much more dependent on short-term interest rates than those businesses?

Mr. Lamont: I am very surprised by the right hon. Gentleman. We have had from him and his hon. Friends on the Liberal Bench and from Labour Members nothing

but pressure to reduce interest rates. We now have the lowest interest rates in the European Community. That is good for our economy, and nobody can gainsay that.

Mr. John Townend: Leaving aside the remarks of the right hon. Member for Berwick-upon-Tweed (Mr. Beith), does my right hon. Friend take encouragement from the fact that the very low rates of interest in America are now resulting in significant economic growth in that country? Does he agree that that gives enormous opportunities to British exporters, in view of the more competitive pound, and that countries that remain in the exchange rate mechanism will see no significant recovery until the Bundesbank reduces its rates?

Mr. Lamont: It is certainly true that recovery is strongly under way in the United States, based on the low interest rates that have obtained there for some time. Given that a higher proportion of our exports goes to the United States than do the exports of other European Community countries, we stand to benefit enormously. I have made clear for many months my belief that it would be for the benefit of the European economy if interest rates in Europe were generally lower.

Mr. Gordon Brown: On the question of a co-ordinated reduction in interest rates, does the Chancellor support the Christopherson European recovery plan? Why is the French Finance Minister and not the British Chancellor taking the lead with new proposals for a European recovery programme? Why has the issue of unemployment been relegated on the British agenda for Edinburgh from the formal session to a mere open-ended discussion over lunch? Will the right hon. Gentleman not realise, even at this late stage, that the test of the British presidency is whether the Government will show the political will to take a lead in reducing unemployment?

Mr. Lamont: As question 5 is on that subject, I do not know why the hon. Gentleman could not hang on and ask a supplementary question that is relevant to the question tabled. He may insist on asking an irrelevant question but I shall give a relevant answer. First, the Christopherson plan has nothing to do with interest rates, so the hon. Gentleman should be clear about that. Secondly, we shall discuss at Edinburgh with other member states a package of measures designed to get the European economy moving again. Contrary to what the hon. Gentleman says, this country has led the way with the package that I announced in my autumn statement: greater priority for capital programmes, with tight control over current spending; special help for the housing market and the construction industry; and additional incentives for private sector investment. Moreover, in the past couple of months, I have announced three percentage points off interest rates, which is providing significant extra help to British business and those with mortgages. At Edinburgh, we shall suggest that others in Europe follow Britain's lead.

Manufacturing Industry

Mr. Nicholas Winterton: To ask the Chancellor of the Exchequer what further proposals he intends to bring forward to stimulate manufacturing industry.

The Chief Secretary to the Treasury (Mr. Michael Portillo): Manufacturing industry enjoys the benefits of


the lowest interest rates in the European Community, inflation below the European Community average in each of the last 14 months, as well as a competitive exchange rate. In addition, the measures in the autumn statement are targeted on sectors where assistance will be most effective. Against that background, I hope to see increasing optimism and confidence about the future.

Mr. Winterton: Does my right hon. Friend agree that, if the manufacturing and construction industries are to be stimulated again and are to rise to fulfil their potential as vital parts of the United Kingdom economy, we need a new recognition and understanding by his Department, the Department of Trade and Industry and the banking and investment sector of the vital long-term potential of those industries as the only source of non-inflationary economic growth? Does he agree that they must not be sacrificed on the altar of a quick buck or a big dividend?

Mr. Portillo: My hon. Friend's support for manufacturing industry is one of the best-known facts about the House of Commons. My right hon. Friend the Chancellor has strongly echoed part of what he said, in particular in his speech at the Mansion House when he said that the Government should examine every policy to ensure that it supports industry. My hon. Friend will have been pleased—indeed, I remember his remarks at the time—at the measures in the autumn statement: increased capital allowances; a new 20 per cent. allowance for industrial buildings; the abolition of car tax; the additional export credit cover; and a further reduction in interest rates.

Mr. Skinner: If the Chancellor of the Exchequer has decided on an individual policy of spending his way out of the recession, why cannot it apply to the rest of the country?

Mr. Portillo: The autumn statement set out what we believe to be an appropriate level of public spending. It is extremely important to keep it under tight control. I am surprised that the hon. Gentleman appears to be proposing that we should have higher spending and higher borrowing.

Mr. Ward: Does my right hon. Friend agree that the best thing that the House could do for this country is to prevent the Labour party from talking down the country, particularly the manufacturing industry, at every opportunity both at home and abroad?

Mr. Portillo: My hon. Friend is absolutely right. The greatest challenge that we face now is the restoration of confidence. It is not only the Government who must play a part in restoring confidence; it is business, the Labour party and the media. There are many reasons why we should feel confident about the future, and I have already given some of them. Recovery in our car industry is another example. Recently, production increased by 20 per cent. on the same period last year, and forecasts show that there will be a 12 per cent. increase in car production next year. One would hope that Opposition Members would promulgate such facts as evidence of the recovery and evidence that confidence should be picking up.

Mr. Llwyd: When will the Chancellor take effective action to ensure that the banks pass on interest rate cuts to their hard-pressed customers?

Mr. Portillo: My right hon. Friend the Chancellor has expressed his concern about the matter, as I have. He has already held a meeting with the banks, and will be meeting them again next week.

Mr. Anthony Coombs: Does my right hon. Friend agree that, with low interest rates, record productivity and a competitive exchange rate, the base for the manufacturing industry to take advantage of the upturn is the best that it has ever been? Does he agree that the last thing that manufacturing industry wants is to be burdened with additional costs of the sort that the social chapter would impose on it?

Mr. Portillo: My hon. Friend is absolutely right. Productivity in the third quarter was up by 4.4 per cent. on the year before and stood at a record level. Manufacturing exports now stand at a record level. The United Kingdom is in a highly competitive position. We should like to see all of the European Community being more competitive in world markets.
It is certainly the United Kingdom's policy not to adopt the social chapter, because of the extra costs that it would impose. Our Community partners have already decided to adopt it. That decision may be to their disadvantage, but the United Kingdom will not follow them down that road.

European Economic Growth

Mr. Cann: To ask the Chancellor of the Exchequer what new projects he is advocating to stimulate co-ordinated European economic growth.

Mr. Lamont: Ministers at the last Economic and Finance Council agreed that there should be a full discussion of the Community's economy at the Edinburgh Council and that member states should consider what action can be taken, both individually and collectively, to hasten recovery.

Mr. Cann: Does the Chancellor accept that the half-yearly report of the Organisation for Economic Co-operation and Development forecasts that 34 million people in the western countries and Japan will become unemployed and that unemployment in the United Kingdom will reach 3 million shortly after Christmas, even by the Government's method of accounting, and 4 million by the method of accounting that applied in 1979? Does the Chancellor agree that it would be totally wrong to go to the meeting of Finance Ministers tomorrow and say, "Look what we have done in the autumn statement. Why don't you do that?"? We need a proper, well-funded European-wide growth strategy.

Mr. Lamont: I do not agree with the hon. Gentleman. I believe that the measures that I announced in my autumn statement have been widely welcomed by industry and all the representative organisations of industry. They accorded very well with the proposals that they were asking for and thought were appropriate from the Government.
Although unemployment in the United Kingdom has risen, it has risen, as the hon. Gentleman well knows, in many other European countries as well. Other European countries have higher levels of unemployment than we do. But we now have the lowest interest rates in Europe, which will be of enormous benefit to this country. Not only the consequences of the lower interest rates, but the actions in


my autumn statement, put the United Kingdom in a strong position. At Edinburgh we will urge other countries to follow where we have led. We will persuade the Community to take measures that protect jobs, promote investment and lead the way to recovery.

Mr. Oppenheim: Is not one thing certain—that the surest way to prevent growth in Europe would be for the European Commission to increase burdens on the European economy by massively increasing its spending, as it proposes? That burden would come on top of the onerous load of regulations and the hefty burden of the social chapter, which the Opposition are always so keen to support.

Mr. Lamont: My hon. Friend is absolutely right. Opposition Members and the shadow Chancellor seem to think that the only place where jobs come from is Government spending. The shadow Chancellor's only answer to the unemployment problem is more spending. As my hon. Friend says, more spending can destroy jobs rather than create them. It is essential, when not only Britain but every country in Europe is seeking to control spending, that spending should be controlled at European Community level just as much as at national Government level. The important point that will come up at Edinburgh is our rebate from the European Community. We in Britain are determined to stand firm on that. I notice that the shadow Chancellor has said that there should be a negotiation about that.

Mr. Darling: Is not the truth of the matter that the British Government reluctantly agreed to discuss unemployment over a lunchtime chat—as opposed to making it the main priority at Edinburgh—as a result of pressure from other European states? Will the Chancellor accept that there will be no investment, and no recovery unless confidence improves, and that confidence will not improve unless unemployment comes down? What specific new projects does he intend to propose at the European summit in the next few days? How many jobs will be created in Britain and Europe, without which there will be no return to the confidence that we so desperately need?

Mr. Lamont: The truth is very different from what the hon. Gentleman says. As I have already said, Britain has taken the lead in putting the economic issues on the agenda at Edinburgh. Labour Members ought to tell us why they make it appear to all those who follow these events from abroad that our rebate is up for negotiation. Why should the Opposition weaken our position at Edinburgh?

Value Added Tax

Mrs. Gorman: To ask the Chancellor of the Exchequer what plans he has to increase the rate of value added tax.

Sir John Cope: My right hon. Friend has no plans to do so.

Mrs. Gorman: I thank my right hon. Friend for his reply. Will he take this opportunity to reiterate that it is no part of the Government's policy to increase either indirect or direct taxes? We know that economic recovery means that we must leave spending power in the domestic economy and relieve the pressure for increased wages. Of course, higher taxes would reduce people's income and

take money out of the pocket of the business man who wishes to invest his money in his firm. Does my right hon. Friend agree that the economic strides made by the Government in the last decade were built on the back of tax reductions, not of tax increases?

Sir John Cope: My hon. Friend has given us a shrewd analysis of some of the factors that my right hon. Friend the Chancellor will need to take into account in the Budget.

Mr. William Ross: The Minister has told us that the Government have no plans to increase the rate of taxation. Will he also assure us that they have no plans to increase the scope of taxation, and especially that they have no plans to include newspapers and other periodicals?

Sir John Cope: We have no plans of that sort.

Mr. Alan Howarth: If at some point my right hon. Friend the Chancellor has reason to suppose that the public sector borrowing requirement might become disproportionately large, and if the Cabinet concludes that that cannot be remedied by tightening control of public expenditure, will the Government be willing to increase taxation, and to do so sooner rather than later?

Sir John Cope: Those are decisions that my right hon. Friend will have to take as we get nearer the Budget. As always, we are grateful for my hon. Friend's advice.

Mr. Campbell-Savours: Did the £4,000 contribution that was made by the Treasury to the Chancellor of the Exchequer to enable him to evict a stripper from his private home include a VAT component? Do the Government intend to increase VAT on legal matters?

Sir John Cope: We have no plans in that respect. The hon. Gentleman will always do his best to cheapen the debate.

Mr. Nigel Evans: Does my right hon. Friend agree that not so long ago we fought a general election and that one of our major platforms was taxation—both direct and indirect? The public knew our taxation policies and were also well aware—[HON. MEMBERS: "Ask a question."] Does my right hon. Friend agree that the public knew what our taxation policies were and what those of the Labour party were? That is one of the major reasons why we are sitting on this side of the House and Labour Members are sitting on that side.

Sir John Cope: I absolutely agree with my hon. Friend.

Mr. Nicholas Brown: The Paymaster General is being unnecessarily coy. On 12 March, his predecessor told us of the "categorical pledges" that had been given by the Chancellor and the Prime Minister that there would be
no increase in the standard rate of VAT either before or after the election.
The Paymaster General's predecessor also assured us that there were
no plans to extend the standard rate, or to put up other taxes."—[Official Report, 12 March 1992; Vol. 205, c. 959.]
Will the Paymaster General confirm that those categorical pledges still hold good?

Sir John Cope: Those categorical pledges stand as they did at that time.

Drug Trafficking (Seizure of Assets)

Mr. Hargreaves: To ask the Chancellor of the Exchequer what was the value of assets seized by Her Majesty's Customs and Excise in each year since the Drug Trafficking Offences Act 1986 became operational; how much of the assets were put back into Customs and. Excise work; and if he will make a statement.

Sir John Cope: The total amount of confiscation orders made by the courts since the Drug Trafficking Offences Act 1986 as a result of Customs and Excise cases is £21.96 million. I will arrange for the figures for individual years to appear in the Official Report, The amount distributed to Customs and Excise through Home Office administered seized assets funds is £614,000 for 1992–93, the first year of the fund's operation.

Mr. Hargreaves: I am sure that my hon. Friend will wish to congratulate the Customs and Excise drug investigation division on the success of its recent operations, which have resulted in huge seizures. Will he also reassure the House that, after 1 January, when border controls are removed, a far greater proportion of any assets—or, rather, funds realised from the seizure of assets from drug trafficking—will be redirected towards the investigation division?

Sir John Cope: I certainly join my hon. Friend in congratulating Customs and Excise, both on last year's seizures of dangerous drugs with a total street value of about £350 million and, in particular, on two recent seizures which have gained a good deal of publicity.
The fight against drugs will certainly remain the top priority of Customs and Excise after 1 January, and we are arranging to step up that fight. We must fight drugs at all costs. The majority of resources come from the usual public expenditure round, although the seized assets allow us to use some international funds to top up the public funds.

Mr. Foulkes: Does the Paymaster General recall a report produced during the previous Parliament by the Select Committee on Home Affairs, which suggested that the Channel islands were being used to launder drug money? What action are he and his colleagues taking to ensure that such reprehensible action does not continue?

Sir John Cope: Since that time the law has been improved, and it is being stepped up further in the Criminal Justice Bill, which will help us to obtain more money from seized assets.
Following are the figures:


year
£ million


1986–87
nil


1987–88
0.80


1988–89
6.00


1989–90
7.59


1990–91
4.73


1991–92
2.84

Gross Domestic Product

Mr. Milburn: To ask the Chancellor of the Exchequer what was (a) the growth in gross domestic product since 1979 for the United Kingdom and (b) the OECD average.

Mr. Nelson: Average annual growth between 1979 and 1991 was 1.8 per cent. in the United Kingdom and 2.8 per cent. on average in OECD countries respectively; but between 1981 and 1991, of the G7 countries only Japan had a substantially higher average annual rate of growth than the United Kingdom.

Mr. Milburn: Is the Economic Secretary aware that, if economic growth in this country had matched the performance of our leading industrial competitors, the United Kingdom's output since 1979 would have been some £245 billion higher than it was under his Government? Does he not recognise that his failure to ensure long-term investment in British industry means that, day by day, the gap between Britain and other industrialised nations is widening rather than narrowing? Is not that £245 billion growth shortfall a simple indication that the Government have failed this country?

Mr. Nelson: Like so many Opposition Members, the hon. Gentleman seems to enjoy talking down the United Kingdom's economic performance. Let me tell him that, during the 1980s, this country grew faster than France, Italy or Germany, and took the lion's share of inward investment from the United States and Japan. They have confidence in this country's economic future, even if the hon. Gentleman does not.

Mr. Butterfill: Does my hon. Friend agree that the surest way to ensure that we did not have good economic growth would be to adopt Labour's policies, have the Government choose where we invested and pile tax increase on tax increase, as was so enthusiastically espoused by the Labour party in the last election?

Mr. Nelson: That is self-evident, and the electors agreed.

Mr. Andrew Smith: Is not the truth that it is not us talking Britain down but the Government who have been doing Britain down? The failure of their policies for growth are evident in the wrecked businesses, wrecked industries and wrecked lives up and down the land. We need action for investment, action for training, action for research and development, and an emergency programme for jobs. If the Government will not give us that programme, are they not accepting that unemployment will carry on rising?

Mr. Nelson: I assert again that we never hear any good news from the Opposition. The facts of the matter—[Interruption.] I shall give some facts. Industrial production is up; retail sales have not been higher for more than two years; interest rates have come down; and inflation is falling. The hon. Gentleman should recognise that Britain is well set for growth.

Mr. Ian Taylor: Does my hon. Friend agree that one of the most important facts of the past five years has been the level of inward investment in Britain, compared with the lack of it in other countries? That was recently recognised by Germany, which tried to increase tax incentives. Some


250,000 jobs have been created by that inward investment. Does he agree there are two potential threats to its continuation? One, earlier this year, was the possible election of a Labour Government; the second is the possibility that we might be sidelined by not ratifying the Maastricht treaty.

Mr. Nelson: My hon. Friend is right: the level of inward investment, which is precious and important, has been a tremendous vote of confidence in Britain's future economy and industrial performance. The extent to which inward investment in the car industry has been translated into jobs in some of the most important regions of this country is remarkable. That must be succoured and encouraged.

Government Deficits (Convergence Criteria)

Mr. Hall: To ask the Chancellor of the Exchequer what are his latest proposals to help the United Kingdom meet the convergence criteria on Government deficits as laid out in article 104c of the treaty of Rome proposed under the Maastricht treaty.

Mr. Portillo: The Government are determined to return their budget towards balance as the economy recovers. On the expenditure side, the autumn statement set out firm plans for public expenditure to grow over the medium term at a rate within the average rate of growth of the economy. This will help to ensure that fiscal policy remains consistent with the requirements of article 104c.

Mr. Hall: The Minister will be aware that in my constituency of Warrington, South there are 4,139 people out of work and claiming benefit. Does he agree that the convergence criteria of the Maastricht treaty represent the economic agenda of the 1980s, which was a deflationary agenda, and do not meet the needs for growth of the 1990s? Will he therefore give a commitment that he will place at the top of the Government's agenda the eradication of the fear of unemployment?

Mr. Portillo: I believe that the Government's policy on spending and borrowing is appropriate to the 1990s. The Government have allowed for the extra spending required during the recession to meet additional Government obligations in respect, for example, of the unemployed. None the less, the Government cannot borrow on the never never and it is extremely important that our borrowing should he reduced as the economy recovers. That is why it is our determination that the budget will return to balance as the economy recovers.

Mr. Brazier: I welcome my right hon. Friend's commitment to meet the convergence criteria on the fiscal side by moving our budget into balance, but we should reconsider the full-funding rule. We have substantially lowered the price of money, but we need to increase its availability by easing the liquidity in our over-tight banking system.

Mr. Portillo: I know that that is my hon. Friend's view. He will know that my right hon. Friend the Chancellor of the Exchequer is following a full-funding policy. That is the clear policy of the Government.

Mr. Denzil Davies: Is it not a fact that the convergence criteria in the Maastricht treaty are a recipe for deflation, depression and higher unemployment in Europe? Is there not a contradiction between support for the Maastricht

treaty on the one hand and calls for a co-ordinated European policy of economic growth on the other? After all, one cannot worship God and mammon at the same time.

Mr. Portillo: I am extremely surprised that the right hon. Gentleman believes that the ambitions to bring down rates of inflation and interest rates and to keep tight control of national debts and borrowing are to be regarded as in some way harmful policies. If we were to allow our borrowing to get out of control, it would mean that year by year more and more public spending would be pre-empted by debt interest payments. and less and less would be available for priority public spending programmes. I cannot believe that that is what the right hon. Gentleman seriously wants.

Car Registrations

Mr. Hendry: To ask the Chancellor of the Exchequer what was the number of new car registrations in the latest period for which figures are available; and what was the comparable figure for the same period last year.

Mr. Lamont: The Society of Motor Manufacturers and Traders estimates that there were 106,902 new car registrations in November—6.25 per cent. more than in November 1991.

Mr. Hendry: I am grateful to my right hon. Friend for that most encouraging reply. Is he aware that the SMMT expects car production to be up 12 per cent. next year, which is clear evidence of the recovery in the car industry? Does he agree with me that one major component of that recovery will be Toyota in Derbyshire, whose model the Toyota Carina—it might perhaps have been better named the Toyota Edwina, in view of the support received from that quarter—comes off the production line next Wednesday?

Mr. Lamont: My hon. Friend is absolutely right that foreign investment in the motor industry in this country is making an enormous contribution both to manufacturing output and to our exports. As my hon. Friend said, the SMMT is expecting a substantial rise in production, not just next year, when Nissan, Toyota and Honda come on stream—[Interruption.] Hon. Gentlemen are quite wrong. Those companies are British companies just as much as any others. They have invested here and deserve to be regarded as British companies, just as those who came from the United States are regarded as British companies. Furthermore, I notice that DRI Europe, which does the forecasting for the SMMT, is forecasting that in the United Kingdom car output will rise from 1.4 million to 2.7 million in 1997. That is a tremendous contribution from foreign investment and ought to be widely welcomed by everyone in the House.

Autumn Statement

Mrs. Browning: To ask the Chancellor of the Exchequer what response he has received from business organisations to his autumn statement.

Mr. Portillo: The Chancellor's autumn statement has been widely welcomed by business organisations throughout the country.

Mrs. Browning: Does my right hon. Friend agree that the warm welcome from the Confederation of British Industry to the autumn statement is welcomed by many businesses, particularly small businesses? In particular, will he encourage his right hon Friend the Chancellor, in considering measures for the Budget, to look at the tax treatment of capital allowances so that small businesses can, under a favourable taxation policy, carry forward profits for capital purchases from one tax year to the next?

Mr. Portillo: My hon. Friend was certainly right to draw attention to the breadth of support that there was for the autumn statement: it came from the CBI, the Institute of Directors and a very large number of different business leaders. I believe that one of the reasons why it was so welcomed was that the Government were responsive to ideas that had been put to them by British business. My hon. Friend seeks to take the debate on further by putting forward new proposals that my right hon. Friend the Chancellor might wish to consider in his Budget. I cannot at this stage pre-empt what may be in that Budget, but I am very grateful to my hon. Friend.

Mr. Hain: Why did the Chief Secretary not report the statement of the Engineering Employers Federation, which said that the Government's policies were not only economically incompetent but industrially illiterate as well?

Mr. Portillo: Why, in turn, did the hon. Gentleman not refer to the CBI, the chairman of Grand Met, the British Retail Consortium, the Institute of Directors, Williams Holdings, GKN, Wimpey, the National Association of Estate Agents, the Halifax, the Council of Mortgage Lenders, the chief executive of the SMMT, the Rover group, Vauxhall, the chief executive of the Retail Motor Industry Federation, or any of the others?

Autumn Statement

Mr. Brandreth: To ask the Chancellor of the Exchequer what representations he has received from businesses in the north-west about his autumn statement.

Mr. Portillo: The Chancellor's autumn statement has been widely welcomed by business organisations in the north-west and throughout the country.

Mr. Brandreth: Is my right hon. Friend aware that in Chester the chamber of commerce has warmly welcomed the broad range of measures introduced in the autumn statement, warmly welcomes the fact that we now have the lowest interest rates in the European Community and believes that the only missing ingredient is confidence, which in Chester is now beginning to return?

Mr. Portillo: I have been very pleased by some of the news from the north-west. General Motors and Vauxhall have invested £190 million in a new V6 engine plant at Ellesmere Port, and AMCOR in my hon. Friend's constituency of Chester has invested £25 million to build a new corrugated box manufacturing plant. I am sure that that is good news for my hon. Friend and for all his constituents.

Mr. Mandelson: Would not growth in the north-west and the rest of the country be greatly assisted by greater financing of capital projects? Has not the president of the European Investment Bank said that if the bank were

asked, it would increase and speed up the financing of capital projects throughout this country and Europe? Why have the British during their presidency not asked the bank to do so?

Mr. Portillo: First, I believe that one of the reasons why such a broad welcome was given to the measures contained in the autumn statement was that it offered so much protection for capital projects. Individual projects that we have announced, such as proceeding with the Jubilee line, are of tremendous symbolic significance and very helpful. As for the European Investment Bank, my right hon. Friend the Chancellor of the Exchequer may have some proposals regarding the bank which he will wish to put to the European Community at the Council meeting in Edinburgh.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Hinchliffe: To ask the Prime Minister if he will list his official engagements for Thursday 10 December.

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): I have been asked to reply.
This morning my right hon. Friend the Prime Minister presided at a meeting of the Cabinet before departing to Edinburgh for the European Council meeting.

Mr. Hinchliffe: Does the Leader of the House agree that the extent of marriage breakdown in Britain, and especially its implications for the children involved, is a matter of great concern to the nation as a whole? Will he press on the Prime Minister the need properly to fund the conciliation and counselling services undertaken by organisations such as Relate and the National Children's Home? Does he recognise the direct connection between the Government's policies and the current incidence of marriage breakdown?

Mr. Newton: As it happens, I know well from my own previous and, indeed, present association with Relate that a great deal is going on between the Government and that organisation and others to help in this very important matter. I shall take the hon. Gentleman's question as an expression of his support for our encouragement of those organisations.

Mr. Thomason: Will my right hon. Friend invite the Prime Minister to come to my constituency of Bromsgrove, where he will find a well managed and well run local authority which is Conservative-controlled? Will he also suggest to the Prime Minister that he might choose to visit Monklands, the constituency of a member of the Opposition, where he will find a local authority riddled with nepotism?

Mr. Newton: I think perhaps the proper response to that question is that it is to be hoped that the right hon. and learned Member for Monklands, East (Mr. Smith), who is also holding a meeting in Edinburgh, might pay a visit to Monklands and look into it himself.

Mrs. Beckett: Has the Lord President seen the growing number of references to the likelihood that we shall soon see the emergence of an explicitly two-tier Europe? Which tier will Britain be in?

Mr. Newton: I have seen the references and I know that Britain will be in the fast lane. I also know that if the Labour party had its way, we should have been forced into the slow lane.

Mrs. Beckett: The position that the Lord President describes is certainly that which should exist, but I do not think that anyone else will think that it is the position which does exist. Does he recognise that a two-tier Europe with Britain in the second tier is just what British business has long feared, and that if that happens, it is not only likely to be extremely damaging but will be in no small part due to the incompetence of the Government's economic policy and their chaotic mismanagement of the British presidency?

Mr. Newton: I do not quite know on what basis the hon. Lady puts her point that nobody agrees with us. The whole of British industry knows that Labour policies in relation to the social chapter, tax policies and payroll tax would mean that Britain would be in the slow lane throughout the world.

Mr. Gallie: Is my right hon. Friend aware that yesterday 9,000 Rangers fans travelled to Germany at a cost of £300 per head to witness Rangers' magnificent win over Moscow? Does he agree that on that basis there is light at the end of the recessionary tunnel?

Mr. Newton: I did not know about the 9,000 figure, but I am delighted at the result and my hon. Friend makes a good point.

Mr. Ashdown: Will the Leader of the House respond to the question of which I gave him notice yesterday so that he might have a chance to discuss the answer with the Prime Minister? In view of the deteriorating situation in the area, will he give us a categorical assurance that the Government, working with others, are not prepared to allow the city of Sarajevo to fall to the aggression of the Bosnian Serbs?

Mr. Newton: I am grateful to the right hon. Member for Yeovil for his courtesy. I can tell him that the British Government see no justification whatever for continued Serb aggression in Sarajevo or anywhere else in Bosnia. Clearly, the western powers to which he referred could give the sort of undertaking that he seeks only by introducing a massive injection of foreign military power. The Government have made it clear on a number of occasions that they do not believe that such an intervention would contribute to a solution of the crisis. The right hon. Gentleman will know, however, that after the steering committee meeting of the conference on Yugoslavia here in London there will be a meeting in Geneva next week when the main item on the agenda will he the war in Bosnia.

Miss Emma Nicholson: Will the Lord President lead the House in condemning the religious violence which has now spread worldwide? Will he also agree that the International Moslem Foundation, a moderate organisation, and the Al Khoei and Ul-Bayt based in the United Kingdom, are just as horrified as we are by the violence and are solid and sincere members of the United Kingdom?

Mr. Newton: I very much endorse the concern and support that my hon. Friend has expressed and also the calm support by numbers of people, including the Indian Prime Minister, throughout the world.

Mr. Tony Banks: To ask the Prime Minister if he will list his official engagements for Thursday 10 December.

Mr. Newton: I have been asked to reply.
I refer the hon. Member to the reply that I gave a moment ago.

Mr. Banks: I say this with no disrespect to the Leader of the House, but this is like getting 24 points on the football pools and finding that the first dividend is only 50 pence. Does the right hon. Gentleman have any regrets about the fact that the Conservative party sent two experts from its dirty tricks department to help President Bush, that the Foreign Secretary sent a telegram to James Baker saying "happy shooting" just before the election, and that some idiot authorised a search of Bill Clinton's files? Is it any wonder that in Arkansas the Prime Minister is regarded not so much as an FOB as an SOB?

Mr. Newton: If the hon. Member for Newham, North-West were to win as much as 50 pence on the pools, he would be doing better than I did in the days when I did them. On his question, he may like to know that there have been some very friendly exchanges between President-elect Clinton and the British ambassador only yesterday evening, and that President-elect Clinton has made it clear that he looks forward very much to meeting my right hon. Friend the Prime Minister after the inauguration.

Mr. Luff: Will my right hon. Friend confirm that, among the many issues facing the Edinburgh summit, the Government attach the highest possible priority to the future financing of the Community, and especially to securing Britain's abatement?

Mr. Newton: I assure my hon. Friend that that is precisely the case. Future financing, enlargement and finding a solution to the Danish problem are important key items on that difficult agenda. My right hon. Friend the Prime Minister will certainly make it clear that Britain has no intention of compromising on the abatement.

Mr. Kilfoyle: To ask the Prime Minister if he will list his official engagements for Thursday 10 December.

Mr. Newton: I have been asked to reply.
I refer the hon. Member to the answer that I gave some moments ago.

Mr. Kilfoyle: As we approach Christmas, may I draw the Lord President's attention to the publication today of "Sick to Death of Homelessness" by the housing charity, Crisis, and to the "This Week" television programme this evening entitled "Dying for a Home"? One of the conclusions drawn is that of the 617 deaths of homeless people up to 31 August this year, 65 per cent. were preventable, given proper housing and good medical care. Is that not a terrible indictment of the callous disregard with which the Government treat those least able to help themselves?

Mr. Newton: The hon. Gentleman might have been more persuasive if he had mentioned that, as a result of measures introduced by the Government during the past


year, the number of households accepted as homeless has fallen, the use of bed-and-breakfast accommodation has fallen by nearly a quarter, and the number of people known to be sleeping rough on the streets of London has dropped by about 60 per cent. according to an assessment made by the voluntary organisations themselves.

Mr. Hargreaves: Notwithstanding the reply that my right hon. Friend gave to the right hon. Member for Yeovil (Mr. Ashdown) about our intervention in Sarajevo, will he consult the Prime Minister to ensure that an undertaking is given to come to the House and provide a debate before any British troops are used for anything other than strictly humanitarian aid purposes?

Mr. Newton: I note my hon. Friend's point, and I shall of course draw it to the attention of my right hon. Friend the Prime Minister.

Ms. Glenda Jackson: To ask the Prime Minister if he will list his official engagements for Thursday 10 December.

Mr. Newton: I have been asked to reply.
I refer the hon. Member to the answer that I gave some moments ago.

Ms. Jackson: Is the Lord President aware that more than 7,000 homeless families will spend Christmas in bed-and-breakfast accommodation without the means or resources to prepare the simplest of meals? In the light of the growing body of evidence of the ill health and malnutrition suffered especially by the children of families in bed-and-breakfast accommodation, does not the right hon. Gentleman think it time for a boarder premium to be paid to such families so that while they wait for the right to a home at least their children have the right to a decent diet? Or is he prepared to allow the increasing poverty and homelessness on our streets to be accompanied by scurvy and rickets?

Mr. Newton: I have already commented on the general question of homelessness. The hon. Lady will know that, in addition to what I have already said, it has recently been announced that the Government are to put a further sum of nearly £90 million over three years into the rough sleepers initiative to tackle some of the problems which worry her. She will also be aware that, as a result of the announcement made by my right hon. Friend the Secretary of State for Social Security a few weeks ago, there will be a real increase in the value of income-related social security benefits next April.

Mr. Clappison: To ask the Prime Minister if he will list his official engagements for Thursday 10 December.

Mr. Newton: I have been asked to reply.
I refer my hon. Friend to the answer that I gave some moments ago.

Mr. Clappison: Does my right hon. Friend agree that in view of the great interest that parents have recently expressed in information about their children's examination performance—information which they have every right to have and which the Government have allowed them to have, but which the Opposition would deny them—parents would feel huge disappointment if some teacher unions boycotted their children's tests?

Mr. Newton: I very much agree with my hon. Friend. A boycott of the tests would betray the pupils who have been working hard at the national curriculum and who deserve to have their achievements recognised. Her Majesty's inspectors' reports on the trial tests have said that they were a great success. It is absolutely right to say that it is time that the Opposition stopped opposing everything that helps to improve the quality of education and choice for parents.

Mr. Boyce: Given the state of the economy, the homelessness and the poverty in this country today, does the Leader of the House agree that the worst possible scenario is that the Government know what they are doing?

Mr. Newton: When the hon. Gentleman makes such a point, he might remember that in the past two years the rate of inflation has been more than halved and interest rates have been more than halved. We see exports at record levels and we see increases in retail sales. In the past three months, we have seen a 20 per cent. increase in car production.

Mr. Duncan: To ask the Prime Minister if he will list his official engagements for Thursday 10 December.

Mr. Newton: I have been asked to reply.
I refer my hon. Friend to the answer that I gave some moments ago.

Mr. Duncan: Does my right hon. Friend agree that those who try to criticise the basis on which houses have been valued for the purposes of the council tax risk severely misleading the public? Does he agree that it is relative house prices and not absolute house prices that matter? Does he agree that we have devised a fair basis for the fair implementation of a very fair tax?

Mr. Newton: I of course agree with my hon. Friend that the purpose of the valuations is a comparison between relative property values. I agree even more with him that a system that takes relative values into account—alongside other factors, including rebates—will be far fairer than the discredited rating system to which the Labour party wishes to return.

Business of the House

Mrs. Margaret Beckett: Will the Leader of the House state the business for next week?

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): Yes, Madam. The business for next week will be as follows:
MONDAY 14 DECEMBER—Motion for Christmas Adjournment.
Proceedings on the Consolidated Fund Bill.
TUESDAY 15 DECEMBER—Timetable motion on the Education Bill, followed by remaining stages of the Civil Service (Management Functions) Bill [Lords].
WEDNESDAY 16 DECEMBER—Remaining stages of the Prisoners and Criminal Proceedings (Scotland) Bill [Lords].
Motion on the Environmental Information Regulations.
THURSDAY 17 DECEMBER—Debates on the Adjournment.

Mrs. Beckett: I thank the Leader of the House for that statement. Will he ensure that there is a statement before Christmas on the scale of the sharp increases in food prices which we can expect to see in the new year as a result of the effects of devaluation of the green pound? Should not the public be warned of that and other inflationary consequences of the Government's failures?
Does the right hon. Gentleman recognise the real and growing concern that the Government's reluctance to listen to debate and to other points of view will be heightened by his announcement just now of a guillotine on the largest ever education Bill? It went into Committee only three weeks ago, and the meat of the Bill is in the early clauses. There will be considerable concern about that.
The Leader of the House may recall that we asked last week for a statement on guidelines on electoral registration because of the position in the Conservative-controlled London borough of Brent. The electoral register there has fallen by 26,000 in the past year. Is the right hon. Gentleman aware that Mr. Justice Potts has said in court today that there is a case to answer because of the discrepancy between the electoral register in Brent, at under 150,000, and the poll tax register, which shows 190,000? Will the right hon. Gentleman reconsider? May I press him again on that statement?
Does the right hon. Gentleman recognise that there will be concern among hon. Members of all parties about the Audit Commission report that, despite the work being speeded up of late, works on fire precautions in this building, which were commissioned in 1979, are not completed? A fire certificate cannot be issued for three or four years yet. That will be of great concern to hon. Members and to staff everywhere in the House.

Mr. Newton: The hon. Lady asked first about food prices. She will know that some of her right hon. and hon. Friends have been seeking an undertaking that there will be a statement following the Agriculture Council next week. Although I cannot give an absolute guarantee of that at the moment, we are certainly considering the matter and may be able to provide an opportunity of the sort that the hon. Lady seeks.
The hon. Lady asked about the timetable motion on the Education Bill, which will be debated on Tuesday. I remind her that—I think almost unprecedentedly—we gave two full days for the Second Reading of the Bill. Let me state the position simply: the Bill has now been debated in the Standing Committee for 61 hours, and the Committee has only reached clause 13. There is nothing unusual about a Government seeking to make more progress than that on such a Bill.
The hon. Lady's third question related to electoral registration. I have not had an opportunity to study the remarks that she attributed to Mr. Justice Potts but, on the assumption that she has reported them accurately—which I have no reason to doubt—I am sure that my right hon. and learned Friend the Home Secretary will want to consider what the hon. Lady and the judge in question have said.
The hon. Lady asked about the Audit Commission's report on safety precautions. She will be aware that the Chairman of the Accommodation and Works Committee answered a question on that matter very recently, and that there are significant signs that better progress is being made. Nevertheless, I am sure that the Chairman of that Committee will wish to consider what she has said this afternoon.

Sir Peter Emery: Will my right hon. Friend pay some attention to the fact that the Procedure Committee has now been appointed and has met, but that we await a reply from the Government in respect of a number of reports that have already been made? It would be helpful to the progress of the work of that Committee if those replies could be made as soon as possible.

Mr. Newton: Let me take this opportunity to congratulate my hon. Friend on his re-election as Chairman of that important Committee. He knows that I am anxious to make progress on these matters, which concern, among other things, some useful possible changes in the arrangements for petitions. I hope to respond to my hon. Friend quite quickly.

Mr. Derek Enright: Does the Leader of the House recall that the President of the Board of Trade assured the House from that very Dispatch Box that, during the review of the 10 pits, no miner would suffer in terms of benefits and payments? Is he further aware that British Coal announced yesterday that it will not be paying what is known as the Christmas bonus, on the ground that the miners are not working underground? I have confirmation of that in a letter from the Minister. Will he drag the President of the Board of Trade away from his lunch and to the Dispatch Box so that we can debate the disgraceful nature of this Scrooge-like decision?

Mr. Newton: This is the latest in what must by now be a long line of occasions on which I have been invited to drag the President of the Board of Trade to the House. I do not think that I can undertake to do that, but I can certainly undertake to bring to my right hon. Friend's attention what the hon. Gentleman has just said.

Mr. Bill Walker: Has the Leader of the House seen early-day motions 991, 992 and 1040?
[That this House is concerned that for the last 10 years Councillor J. Brooks has been Labour Leader of Monklands District Council, where with the help of the local Labour Party he has achieved a position of near absolute power


which has resulted in ( 1 ) a £1 million land deal for a company owned by Councillor Brooks and his brother, whereby the company acquired council land for £50,000 and forced through planning permission to make the land worth more than fl million the payment of generous fees to Councillor Brooks and his brother and other expenses followed by the company being placed in liquidation with unpaid bills to third party creditors of over £200,000, ( 2 ) the employment by the Council of Councillor Brooks' son in Direct Works, another son in the Planning Department and a daughter in a temporary post, (3) the sacking from council employment of Labour Party member Tom McFarlane at 51 years of age, believed to be the only Monklands District Council worker ever made redundant without being offered alternative employment, because he and his wife had dared to question the internal procedures of the local Labour Party and its corrupt rule of the Council and (4) the attempt by Councillor Brooks to cover up the mafia-like behaviour of himself and other Labour councillors by seeking to obtain council funding for legal fees for a private libel action against the local newspaper and by starting a council-owned free newspaper; believes that other allegations about relationships between the expenditure of council money and benefits to Councillor Brooks and his family need to be independently investigated; and is further concerned that the manner in which the Labour party is governing local councils in Scotland is against the public interest and requires to be independently investigated.]
May we have an early opportunity to debate the behaviour of Monklands district council—and, in particular, the Labour leader of that council—so that the Leader of the Opposition and the shadow Secretary of State for Scotland can give us their views on the conduct of the council?

Mr. Newton: I made some observations on that matter a few moments ago, albeit wearing a slightly different hat. I shall not add to them, except to say that my hon. Friend will recall that the first items of business that I announced for next week were the motion for the Christmas Adjournment and the proceedings on the Consolidated Fund Bill. I leave it to him to decide whether on the former he might argue that the House should not adjourn until the right hon. and learned Member for Monklands, East (Mr. Smith) has had an opportunity to say something about the matter.

Mr. John Spellar: Has the Leader of the House taken note of the considerable and growing concern expressed by hon. Members on both sides of the House about private wheel clamping? Will he make time next week for the Home Secretary to make a statement about the instigation of the public consultation that has been promised for so long?

Mr. Newton: I am aware that a number of comments—some of them criticisms—have been made on that subject, and also that it is one that the hon. Gentleman has been pursuing. I shall bring to the attention of my right hon. and learned Friend the Home Secretary the point that he has just made.

Mr. Patrick Cormack: As it cannot really matter whether we debate the Prisoners and Criminal Proceedings (Scotland) Bill next week or when we come back after Christmas, may I urge my right hon. Friend to think again about the business for next week and

give us a debate on foreign affairs? It really would be appalling if Sarajevo fell during the Christmas recess and the House had not debated the matter.

Mr. Newton: I cannot promise my hon. Friend the debate that he seeks but, to echo something that I just said, it is clear that there are a number of opportunities between now and the recess on which my hon. Friend and other hon. Members could make known their anxieties on that matter.

Rev. Martin Smyth: Can we have an urgent statement by the Secretary of State for Northern Ireland concerning the scandalous suggestion that water privatisation should be within the trade? Would that not repeat the folly of electricity privatisation, since we have discovered that contributions deducted from workers' wages to pay for their electricity bills were used by a purchaser of one of the businesses to pay for that business?

Mr. Newton: I shall draw the attention of my right hon. and learned Friend the Secretary of State to the matter that the hon. Gentleman raises.

Mrs. Elizabeth Peacock: Will my right hon. Friend consider whether he could ask our right hon. Friend the President of the Board of Trade to make a brief statement in the House next week about progress on the coal closure issue? Following on from the question of the hon. Member for Hemsworth (Mr. Enright), I think that there is much concern and not a little confusion about exactly what is happening, and whether British Coal is taking the correct action.

Mr. Newton: My hon. Friend's concern for those matters is well known and well documented. She will be aware that my right hon. Friend gave evidence to a Select Committee earlier this week, in which a number of further points were raised, which I hope made it clear that the review is genuine and real, and not simply a rubber-stamping exercise.

Mr. Brian Sedgemore: Is the right hon. Gentleman aware that a petition containing half a million signatures was handed to Downing street this morning to save St. Bart's hospital from closure? Now that Londoners have delivered their democratic verdict, will he ensure that the Secretary of State for Health comes to the Dispatch Box next week to announce that Professor Tomlinson's mad, bad and sad proposal to close that hospital will be assigned to the dustbin of medical history?

Mr. Newton: I hope that, in giving a more measured response than the hon. Gentleman's question, I shall not be misunderstood if I say that it is well recognised—I am not commenting on a particular proposal—that it is right to deal with the balance between primary care and other forms of health spending in London against the background of a long period in which health care in London has received far more per head of population than that in other parts of the country. I do not think that it is wrong to examine issues arising from that.
As far as the specific case is concerned, I have no doubt that my right hon. Friend will be aware of the petition and will take it into account, but she is considering a wide variety of issues and representations and intends to respond in a proper, measured way in the new year.

Mr. James Pawsey: Does my right hon. Friend accept that his announcement on the timetable for the Education Bill will be widely welcomed? As he said, about 61 hours have been spent on the Bill and only 5 per cent. of it has been achieved. We are anxious to make progress, despite the filibustering efforts of Opposition Members. In his statement, my right hon. Friend referred to the fact that, unprecedentedly, two days were spent discussing the Bill on Second Reading. Will he agree to a further two days being spent on the Bill on Report?

Mr. Newton: I note my hon. Friend's request and endorse some of his earlier comments. We shall consider what should be in the motion that we shall invite the House to endorse—I deliberately reply in general terms—and that will be against the background that what we did at Second Reading clearly demonstrates that there is no question that we are seeking arbitrarily to curtail discussion of the Bill, but rather that we are seeking to provide a proper opportunity for it to be discussed sensibly.

Mr. David Alton: Will the Leader of the House arrange for the President of the Board of Trade and the Attorney-General to make early statements about the protection given to would-be holidaymakers? Is he aware of a letter that I received today from the Prime Minister, which confirmed that the Government knew that Land Travel had liabilities over assets totalling £2.1 million a year before the collapse of that firm? The letter states:
the Department of Trade and Industry did in fact receive a complaint about Land Travel in August last year … the Department had overlooked this letter when they were consulted over
my earlier correspondence to the Prime Minister. In the light of that, and given that that company must have been trading illegally, does the right hon. Gentleman agree that compensation should be provided to those who lost their savings, and that early criminal action for fraud should be taken?

Mr. Newton: The hon. Gentleman will appreciate, in view of some of the points he made, and particularly his suggestion of possible criminal charges, that I must respond cautiously. I shall make sure that the President of the Board of Trade is aware of what he said. I should perhaps make it clear that the Department of Trade and Industry has no general monitoring role in relation to companies; nor is it responsible for scrutinising company accounts.

Mrs. Angela Knight: I thank my right hon. Friend for announcing the timetable motion on the Education Bill. Is he aware of the concern that is felt by Conservative members of the Standing Committee at the fact that the Bill has been taking, on average, six hours per clause—which, at the current rate of progress, would have meant 1,500 hours in Committee? Is he also aware of the great concern of many parents in my constituency that so much time should have been spent on a handful of clauses rather than the Committee getting on with the proper job of scrutinising the Bill?

Mr. Newton: I am grateful to my hon. Friend for a singularly striking statistic, which shows that we are being reasonable in proposing that there should be a different way of making progress with the Bill.

Miss Joan Lestor: Bearing in mind the almost universal and informed criticism of the Government's lukewarm response to the Warner report, dealing with the plight of many children in residential care, may I ask the right hon. Gentleman for an assurance that that report will be debated at the earliest possible moment? Is he aware that, unless its recommendations are carried out quickly, more children will suffer at the hands of people who are not trained to deal with them but are there simply to abuse them, since the vetting processes for people looking after children in care are very poor indeed?

Mr. Newton: The hon. Lady, who has taken a long and careful interest in those matters over many years, will be aware that, far from dragging her feet—to summarise the suggestion in the hon. Lady's question—the Secretary of State for Health has already instructed local authorities to take immediate action on that aspect and to report back to her by Easter. I do not regard that as foot-dragging.

Mr. Richard Alexander: Can my right hon. Friend advise the House of likely timings for discussions on the reform of Sunday trading? He will be aware that a Bill, of which I am a sponsor, is currently being published by my hon. Friend the Member for Gillingham (Mr. Couchman), and that there is another Bill in the name of the hon. Member for Ogmore (Mr. Powell). Is my right hon. Friend aware that it would be sensible for the Government to introduce their own proposals in debate before wasting time on private Members' legislation which would probably prove to be unnecessary?

Mr. Newton: My hon. Friend will know that, in addition to the measures to which he referred, there is another with a somewhat different purpose due for debate early in the new year. I shall bring his remarks to the attention of the Home Secretary, who has made it clear that it is not possible at present to take a decision quite in the way that my hon. Friend suggests, not least because we have not yet had the judgment of the European Court of Justice.

Mr. Richard Burden: I draw the attention of the Leader of the House to early-day motion 615 dealing with the Caring Costs campaign.
[That this House welcomes the launch of Caring Costs, the campaign for an independent income for carers, which has the backing of 45 voluntary organisations and charities; recognises the substantial contribution made to community care by Britain's six million carers; and urges the Government both to review the level of financial support given to older carers and hold a debate on the financial aspects of providing care and support at home.]
Is he aware that that motion today received its 150th signature, confirming the support it has in all parts of the House? Carers save the country £24 billion a year, yet are racked with poverty, although they provide care for 24 hours a day, seven days a week? Does my right hon. Friend agree that it is time we had an early debate on the subject, as is clearly requested by many hon. Members?

Mr. Newton: The hon. Gentleman will know that we have invested much effort over a long period into improving matters for carers, and we expect further improvements as a result of the move to community care from April onwards. This is a subject about which I know something, having played a part, in a former incarnation,


in making a number of significant improvements in social security benefits for carers, which now involve expenditure in their support of £260 million a year.

Mr. Harry Greenway:: Will my right hon. Friend arrange a debate next week on pedestrian safety? Could the motion take account of the people of Northolt, who have great problems arising from the opening of the Hayes bypass, which is pouring large amounts of traffic into Northolt? Could it be coupled with concern for Hanwell, where the children of Hartmain school have been to see me to seek a pedestrian crossing in Greenford avenue, where the traffic is very dangerous for them?

Mr. Newton: My hon. Friend's question is, as ever, a tribute to his vigour in pursuit of his constituents' interests. He seems to have raised points that would classically be the focus of the Christmas Adjournment debate on the Consolidated Fund Bill.

Mr. Bob Cryer: May I draw attention to early-day motion 1041 on delegated legislation?
[That this House notes with alarm that over three thousand statutory instruments have been issued so far in 1992 and that this quantity of delegated legislation is unprecedented in the history of Parliament; regrets that the Government is reluctant to grant time for debate on Prayers against such instruments, and that affirmative instruments can be debated even before the Joint or Select Committees exercise their scrutiny; further regrets that any change in this arbitrary and unhelpful procedure has been rejected by the Leader of the House; and concludes that the increased burden of statutory rules, regulations and orders comes from a Government dedicated to arbitrary, centralised and undemocratic control.]
Will the Government make a statement devoted to removing regulations from the backs of small businesses and other organisations, because the Government have issued 3,000 statutory instruments in the past calendar year, which is an unprecedented number in the history of Parliament? Moreover, they are still being issued. Will the Leader of the House recognise that such a statement would be handy in providing an opportunity for hon. Members to debate prayers against statutory instruments to make up for the significant democratic deficit that exists in the scrutiny of the huge flood of statutory instruments which the Government are producing?

Mr. Newton: May I reply in a slightly different tone by paying tribute to the work of the hon. Gentleman arid his Committee for their detailed work in that area for the House? I shall do what I can, within practical limitations, to ensure that his Committee's work continues to be effective.

Mr. John Bowis: Is my right hon. Friend aware of the deep sense of outrage among parents of children with special educational needs at the statement by the deputy leader of the Labour party that the section of the Education Bill on special educational needs was not part of the "meat" of the Bill? Is that not why we need a timetable motion for the Bill? Will he ensure that that section of the Bill receives adequate time for proper scrutiny and debate, because Conservative members of the Committee wish to see that the interests and needs of those children are taken fully into account?

Mr. Newton: I very much endorse what my hon. Friend says. From my constituency experience, I am well aware that many parents with some of the most difficult problems see the special needs provisions of the Bill as a key element of it and a good reason for getting on with it.

Mr. Frank Cook: Is the Leader of the House aware of the announcement that has been made this afternoon by means of a planted question that tells the House that 182 jobs are to be removed from the royal naval ordnance depot at Eaglescliffe in Stockton, Cleveland? Is he aware that this is the second time that the Ministry of Defence has betrayed the Cleveland community in less than 18 months? Is he further aware that that announcement has been made in a surreptitious way after meetings at which the Minister of State for the Armed Forces undertook to give the basis of the costings on which Admiral Pulvertaft founded his so-called recommendations?
Will the Leader of the House seek to bring the Minister of State to the Dispatch Box where he can be questioned openly, in public, about the falseness of the advice that he has received from the treacherous mandarins in his Department?

Mr. Newton: The hon. Gentleman no doubt has, as I have, a copy of the answer that my hon. Friend the Minister of State has given. It makes it absolutely clear that my hon. Friend has thoroughly conducted the required consultation and carefully considered the points that were raised, but has nevertheless come to that decision.

Mr. David Shaw: My right hon. Friend will be aware that the European single market commences on 1 January, and that a number of freight forwarders and customs clearance agents in my constituency will lose their jobs as a result of their work no longer being required. My right hon. Friend will also be aware that I have received assurances from the Department of Employment that moneys will be made available for retraining purposes and that money will be made available through the European social fund. I understand that the Government will ensure that that money is available.
There is no evidence that the money will trickle down to the companies and people who will be made redundant. Can my right hon. Friend give an assurance that, if necessary, the House will be recalled, so that we can call the Ministers and civil servants to the Bar of the House if the money is not made available to the companies for the benefit of those who will be made redundant?

Mr. Newton: I hope that my hon. Friend will understand if I do not immediately give him the undertaking that he requests. I am sure that he will accept that I will ensure that my right hon. Friend the Secretary of State for Employment is made aware of the point that he has made.

Mrs. Barbara Roche: Will the Leader of the House make time for his right hon. and learned Friend the Home Secretary to come to the House and make a statement about security in London, given that two bomb explosions occurred in Wood Green in my constituency this morning? I have just returned to the House from visiting the scenes of the explosions. A number of members of the public and police officers have


been injured. I am glad to be able to report to the House that all of those members of the public and police officers have now been released from hospital.
I should like to take this opportunity to pay tribute to the police and the emergency services who responded so promptly and efficiently to this absolutely contemptible and cowardly attack.

Mr. Newton: The House will appreciate both the reasons for the hon. Lady raising that matter and the way in which she has done so. I will ensure that my right hon. and learned Friend the Home Secretary is made aware of both matters.

Mr. Phillip Oppenheim: Is there any possibility of having a debate on either the Edinburgh summit or the GATT round to enable hon. Members to point out gently to our French partners that Europe has consumers of food as well as producers? French farmers, who expect to export a high proportion of what they produce, have no right to block the exports of others, be it grain from the United States or lamb from Britain.
Can we have an opportunity to make the point that European consumers already heavily subsidise French farmers and have no right whatever to insist that European consumers buy French food? European consumers should be free to buy the food of their choice.

Mr. Newton: I am not sure that I have the standing to undertake to draw remarks to the attention of a Minister in another country, but I hope that my hon. Friend's remarks are read in France as well as in the United Kingdom. As to opportunities to raise such matters, I anticipate that my right hon. Friend the Prime Minister will wish to report to the House following the Edinburgh Council, which is about to get under way.

Mr. Harry Barnes: Given recent events, is it not time that the royal prerogative powers on the dissolution of Parliament, the appointment of Ministers and the signing of treaties and Bills were discussed in the House with a view to them being taken over by the House and perhaps exercised by Madam Speaker rather than by the Crown?

Mr. Newton: I have no plans to bring about such a discussion or a proposal.

Mr. Eric Pickles: Will my right hon. Friend persuade the Secretary of State for Education to come to the House to make a statement on teacher numbers, which is necessary following a press release issued by the hon. Member for Blackburn (Mr. Straw) which suggested that teacher numbers have gone down? It is a fact that teacher numbers have gone up. I am sure that the hon. Member for Blackburn would want to use the occasion to congratulate the Government on achieving such record numbers.

Mr. Newton: On the latter part of the question, I can only say that hope springs eternal. I share my hon. Friend's hopes. I can promise him a splendid opportunity to raise such matters next week, because my right hon. Friend the Secretary of State is due to answer questions on Tuesday.

Mr. David Winnick: Is it possible for a debate to take place, if not next week, then shortly after we return, about the way in which Government Departments are increasingly seen, with justification, as virtually an extension of Conservative central office? That was witnessed by the way in which the passport records of President-elect Clinton were examined to see whether he had applied for United Kingdom citizenship. Apparently, he had not. Should we not be worried about not so much one particular town—which Tory Members have been on about this week—but the way in which the Government of the day are corrupting public life by using Government Departments in the way I have just described?

Mr. Newton: When one contemplates what has happened in some Labour local authorities over the years, the hon. Gentleman's point seems pretty strange. I can only say, and I do so with feeling, that, from my own fairly considerable experience as a Minister, the hon. Gentleman's suggestion that civil servants allow themselves to be treated as an extension of central office is totally at variance with the facts.

Mr. Barry Field: May I draw my right hon. Friend's attention to the amendment that I have tabled to the Housing and Urban Development Bill, in which I seek to extend the right to buy to tenants of former Greater London council homes? They gave up their homes on the understanding that they were being transferred to the seaside to take up accommodation which was wholly the same as that of tenants of all other local authorities, to whom the right to buy has been extended. They have since been deprived of the right to buy and are unhappy about it.
As my right hon. Friend is something of a wise owl in such matters and was helpful to me last week, will he give me his advice on how I might persuade the Government to take up that necessary reform, which would affect the constituents of many hon. Members?

Mr. Newton: I am grateful for my hon. Friend's kind words. There must be some limit to the extent to which I can offer him advice, helpful or otherwise, on the Floor of the House. However, I should be surprised if my hon. Friend could not find some opportunity to raise the matter during the passage of the Housing and Urban Development Bill. In any case, I am sure that my right hon. and learned Friend the Secretary of State for the Environment will read the words that my hon. Friend has uttered.

Mr. Dennis Skinner: In view of all the statements that were made and the questions that were asked at Prime Minister's Question Time, and as the Government refuse to allow local authorities to build homes for people on the streets, would it not be a good idea at Christmas when we pack up for three and a half weeks to shift the rough sleepers in the House of Lords and put in the rough sleepers off the streets? At least one palace—or at least a few rooms—is going empty, and that accommodation could be used.
If any more homeless want accommodation, they can have three and a half weeks here. There are all these empty Benches. The place is warm and well lit. The people would have accommodation, a canteen and all the facilities they need. If the Government are really concerned about the homeless, they should get it going.

Mr. Newton: I am not sure that those in another place will regard that as an entirely helpful and friendly suggestion. However, I shall certainly make sure that my colleague the Lord Privy Seal is made aware of the elegant way in which the hon. Gentleman put it.

Mr. D. N. Campbell-Savours: Will the Leader of the House read the proceedings of European Standing Committee A yesterday? A Member of the House who is not a member of the Committee was able to walk in under the umbrella of a commercial consultancy. On matters relating to that consultancy, he asked detailed questions of a Minister which the Minister was required to answer because of the questioning procedure of that Standing Committee.
What happened was—

Madam Speaker: Order. May I remind the hon. Gentleman that, if an hon. Member was in a Committee, he was surely there in his own right as an elected Member of Parliament. That should be placed on the record.

Mr. Campbell-Savours: That is absolutely correct, but he was also acting under the umbrella of his consultancy. Although what happened was in order, and the hon. Gentleman did not break any rules of the House, is it not clear that that procedure, as it was exercised yesterday, is incorrect?
While it is of great benefit to Parliament that Members can ask questions in detail, surely some discipline must be exercised personally by Members not to abuse procedures in that way or the Procedure Committee should re-examine the procedure with a view to some reform.

Mr. Newton: I think that you would agree, Madam Speaker, that, as I have not read the report to which the hon. Gentleman referred, it would be wrong for me to make any immediate response. I will read it, however.

Mr. Paul Flynn: Will the Leader of the House arrange a debate next week so that we can congratulate all concerned on the continuation of semiconductor manufacturing in my constituency, and also to examine the worrying claims in today's Electronic Times? It is said that INMOS—International Metal Oxide Semiconductors—which was valued at £120 million 10 years ago, was sold to a Hong Kong company for less than £6 million; that the Government are prepared to assist the company with a maximum of £3 million, whereas the French and Italian Governments have invested tens of millions of pounds; and that the manufacture of the British-controlled, British-invested transputer will not be conducted in Newport in future, but will take place abroad.
Will the Leader of the House give a guarantee that the new company, Newport Wafer Fab, can look forward to at least the same amount of confidence, support, encouragement and investment from the British Government as the French and Italian companies are given by their Governments?

Mr. Newton: For slightly different reasons, I shall respond nearly as cautiously to the hon. Gentleman as I responded a few moments ago to his hon. Friend the Member for Workington (Mr. Campbell-Savours). I can, however, reply in general terms, as well as ensuring that my right hon. Friend the President of the Board of Trade is aware of what the hon. Gentleman has said. As has been

clearly shown, the Government will continue to take a range of actions designed to encourage British manufacturing industry in that and other sectors.

Mr. Alan Milburn: Will the Leader of the House find time next week for us to debate the Government's regional policy, in the light of the announcement made by his right hon. Friend the Minister of State for the Armed Forces about the closure of the Eaglescliffe depot? As the Leader of the House will realise, that announcement will have been received with considerable alarm and disbelief in the north-east—not just because this is the second time in 12 months that the region has been let down, but because the skills and expertise of many of my constituents who work at Eaglescliffe have been insulted by the Government's latest decision.
Is the Leader of the House aware that the decision to close the Eaglescliffe facility runs completely against the grain of the Government's declared intent to switch jobs from south to north, and to narrow regional inequalities rather than widening them?

Madam Speaker: Order. Let me issue a long overdue reminder. Hon. Members should be questioning the Leader of the House's statement and asking him to change next week's business; this is not simply a continuation of Question Time. Would the Leader of the House like to make some response?

Mr. Newton: I shall reply briefly, in the light of your strictures, Madam Speaker. Although I well understand why the hon. Member for Darlington (Mr. Milburn) has raised the subject of Eaglescliffe, I cannot add to what I said earlier to his hon. Friend the Member for Stockton, North (Mr. Cook)—except to say that the Government have put considerable effort into bringing new employment to the north-east, as the hon. Gentleman will know from contacts that he and I had in previous incarnations.

Mr. Andrew Miller: The Leader of the House has told us that the Environmental Information Regulations will be discussed next week. May I draw his attention to column 836 of yesterday's Hansard? The Minister for the Environment and Countryside, who has just left the Chamber, said in answer to a question that the environmental toxic waste regulations should be examined. I have been told, in answer to a question that I posed to the Minister, that the regulations are not yet available. In view of next week's debate, will the Leader of the House impress on his colleague the fact that they should be placed in the Library at the earliest opportunity? I understand that they are in public circulation.

Mr. Newton: I shall certainly look into that, and I shall draw the hon. Gentleman's remarks to the attention of my right hon. and learned Friend the Secretary of State for the Environment.

Mr. Andrew Mackinlay: Will the Leader of the House arrange for a statement to be made before the recess about the haemorrhaging of rail freight from British Rail? Hon. Members on both sides of the House are concerned about that, and also about the state of the manufacturing industries that build our carriages and rolling stock. It has become abundantly clear to the Select Committee that both the rolling stock industry and rail freight are haemorrhaging. Unless ministerial action


arrests the process, we are about to lose an important British industry, and the loss of rail freight could lead to Beeching-style cuts in our rail structure with no consideration of the matter by the House of Commons.
The matter will not keep until the new year. May we have a statement next week about the danger to our railway structure and industries?

Mr. Newton: I cannot undertake to provide time for a debate of the kind that the hon. Gentleman seeks, but I know from my contacts with other hon. Members that his concern has been expressed elsewhere. I have specifically drawn it to the attention of my right hon. Friend the Secretary of State for Transport.

Mr. Mike O'Brien: Will the Leader of the House arrange for an investigation and a statement by the appropriate Minister into the winding up of the pension scheme of the Burlington International Group, leaving a deficiency of £6.5 million and affecting more than 1,000 people, many of them my constituents? They will not be able to get the pensions that they had every right to expect and to hope for. We have seen the same with Maxwell and too many other companies. Is it not time that the Government introduced regulations to prevent the plundering of so-called surpluses from those pension schemes?

Mr. Newton: I am not in a position to comment on the specific case, but I imagine that the hon. Gentleman may have taken it up with my right hon. Friend the Secretary of State for Social Security, or that he intends to do so. On the more general point, he will know that the Government have taken substantial steps to improve the protection of pension funds over the years but in the wake of the Maxwell case have appointed a substantial inquiry to review that. It is operating on as speedy a time scale as can properly be expected.

Adjournment of the House

Madam Speaker: I have a short statement to make to remind hon. Members that on the motion for the Adjournment of the House on Thursday 17 December up to nine hon. Members may raise with Ministers subjects of their own choice.
Applications should reach my Office by 10 pm on Monday next. A ballot will be held on Tuesday morning and the result made known as soon as possible thereafter.

Points of Order

Mr. Frank Dobson: On a point of order, Madam Speaker. I know that you are most concerned to ensure that major Government decisions are announced to the House so that hon. Members have the opportunity to question Ministers. Today, the Secretary of State for Employment has announced that she is abandoning Government funding of trade union ballots and of training for trade union officials. The Government fund the training of the other side of management but are not, apparently, willing to fund the training of the people who will be on the other side of the negotiating table. The funding of trade union ballots, which Lady Thatcher introduced, is apparently to be abolished by the present allegedly more concerned Government.
A statement should have been made on these important matters, either today, when there is no statement other than the business statement, or on Tuesday, when the Secretary of State replied to our Opposition day motion on unemployment, and when again there was no statement. The decision was clearly made then, and it seems to us to be wholly unreasonable that the Secretary of State is not willing to explain why the Government have reached these appalling decisions.

Madam Speaker: As the hon. Gentleman will understand, there has been no breach of our Standing Orders or of our procedures. The matter therefore is not one for the Speaker.

Mr. Dobson: Further to that point of order, Madam Speaker. Your predecessors and you yourself have been keen to ensure that hon. Members have the opportunity to question Ministers on such matters. There will not be any opportunity to question the Secretary of State for Employment until well after Christmas. That is at variance with normal practice, even if it is not out of order.

Madam Speaker: I have made it clear on a number of occasions in this House that I deplore statements being made outside the House rather than to hon. Members. I stand by that. When major changes are made, they should be announced first in the House so that a statement can be questioned. But, as the hon. Gentleman and the House know, I have no authority on these matters, which is why I simply said, so as not to waste the time of the House, that there had been no breach of our Standing Orders or of our procedures. I have previously made my views known very clearly on these matters. Perhaps, if the hon. Gentleman had been present for business questions, he might have put that question to the Leader of the House.

Mr. Dobson: Further to my point of order, Madam Speaker. Business questions were within two questioners of coming to an end before I received the information that I have now. I am, however, grateful to you for once more saying that it is best for Ministers to come and face the music.

Mr. Andrew F. Bennett: Do you not agree, Madam Speaker, that one of your prime roles is to ensure that there is good order in the House? Do you also accept that, if the Government continue not to take any notice of your warnings to them that when they are making important statements they should make them in


the House and not to the Press outside, the only recourse for Opposition Members is to raise points of order and to make a fuss? That does not, on the whole, reflect well on the House. It seems to me that it is very important that, rather than forcing the Opposition into such tactics, the Government should take note of your warning and make sure that on every possible occasion they make statements to the House.

Madam Speaker: Only today, 12 answers have been given to written questions by the Government. It is outside my control whether the Government give written answers to questions or make oral statements in the House. I have noted what the hon. Gentleman has said.

Mr. Dennis Skinner: Do not the complications that are caused for the Chair arise from the fact that, when major statements are made in this way outside the House, hon. Members go to the Table Office, for which you have responsibility, and put questions down—about trade union ballots, say—not knowing that a major change has taken place? Complications can ensue for any hon. Member who tries to table a question on something that has changed on the day without his knowing about it.
That is where the Chair becomes involved, because a Member can take that question that is turned down by the Table Office to the Speaker. I think that the Government ought to bear in mind the fact that, when major changes take place, those complications are created. The trade unions now have only one recourse—to refuse to hold these ballots which the Government decided upon years ago.

Madam Speaker: Order. This was a parliamentary answer. It is not for the Speaker to work out the criteria for what is major and what is not major in these matters.

BILL PRESENTED

NATIONAL HEALTH SERVICE (FREEDOM OF SPEECH)

Mr. Derek Fatchett, supported by Robert Ainsworth, Mr. John Battle, Mrs. Anne Campbell, Mr. Jim Cousins, Mr. Jim Cunningham, Mr. Ian Davidson, Mr. Terry Davis, Mr. Alan Milburn, Ms. Dawn Primarolo, Mr. Terry Rooney, and Mr. Mike Watson, presented a Bill to guarantee National Health Service and related staff freedom of speech on issues of patient and client care; to require the Secretary of State to specify procedures for the expression and investigation of concerns and to provide for the implementation of such procedures; to provide for the drawing up of a Charter setting out the rights and duties of staff; to set up a system of independent appeals; and for connected purposes: And the same was read a First time, and ordered to be read a Second time upon Friday 29 January 1993; and to be printed. [Bill 102.]

Orders of the Day — ESTIMATES DAY

[IST ALLOTTED DAY, IST PART]

CLASS VII

Coastal Zone Protection

[Relevant documents: The Second Report from the Environment Committee of Session 1991–92 on Coastal Zone Protection and Planning (HC 17) and the Government's reply thereto (Cm. 2011).]

Motion made, and Question proposed,

That a sum not exceeding £17,763,619,000 be granted to Her Majesty out of the Consolidated Fund, on account, for or towards defraying the charges for civil services, in Class VII, for the year ending on 31st March 1994, as set out in the House of Commons Paper No. 232 of Session 1992–93.—[Mr. Maclean.]

Mr. Robert B. Jones: It is a great privilege to be able to introduce this debate, particlarly since it is the first opportunity that I have had to pay a tribute to my predecessor, Sir Hugh Rossi, under whose chairmanship this report was produced in April. Sir Hugh was a very distinguished public servant, both as a Minister and, latterly, as the Chairman of the Select Committee on the Environment. I believe that history will say that he had a unique influence on environmental legislation in this country. His is a very hard act to follow, and I am delighted that I had a piece of my apprenticeship under his chairmanship.
I begin by summarising what the Committee said in its report, as I think that that will be of assistance to the House. The report was published in April this year. The Committee chose to take a broad and integrated view of coastal issues and the multitude of bodies, including Government Departments, local authorities and public agencies, which have policies, responsibilities or interests in the coastal zone.
Throughout the inquiry Government officials stressed repeatedly that existing arrangements for coast protection and sea defence were working extremely well. Of course, that was not the view of the vast majority of witnesses in the evidence that they submitted to us. Perhaps the discrepancy is because of the traditional arguments between Departments over such matters—I am thinking especially of the relationship between the Ministry of Agriculture, Fisheries and Food and the Department of the Environment.
After the Committee had heard the evidence, the main conclusions of its report were that coastal protection, planning and management in the United Kingdom had suffered centuries of unco-ordinated decisions and actions—perhaps better described as "inactions"—at national and local levels; that there are inadequacies in the legislation, anomalies in the planning system, a lack of central guidance, and overlapping policies and responsibilities among a host of bodies with poor co-ordination between them.
We concluded that the reasons for such failings were partly a result of the pattern of ownership of the coastal zone and partly because the boundaries separating the


administrative authorities are not meaningful in terms of natural coastal processes and the consequences on one part of the coast of interference in another.
The Committee is certain that there is no single panacea to resolve all the problems currently experienced in the coastal zone, but we are equally convinced that the complexity of the current situation demands a more comprehensive and integrated approach than is presently being taken. We therefore supported the overall perspective commonly known as "coastal zone management", or CZM for short.
Coastal zone management aims to balance demands for coastal zone resources, to promote their sustainable use and, as far as possible, to resolve conflicts of use by integrated planning and management within coastal cells that are defined by natural coastal dynamics rather than administrative tidiness.
Britain is fortunate in having the building blocks for an integrated coastal zone management approach: a whole range of bodies is committed to the concept, and existing coastal groups and forums could be adapted to take on new coastal zone management roles. The Committee therefore concluded its report by recommending that coastal zone management, delivered through a "cascade" of national, regional and local coastal zone management plans, is the key to sustaining the future use, enjoyment and ecology of the coastal zone.
The Government's response dealt with a number, although not all, of the issues. Perhaps it would be helpful if I also summarised what the Government said. It was significant that, at the start of our inquiry, our request for evidence from the Department of the Environment resulted in a memorandum that set out for the first time a full statement of the Government's policies and activities for coastal zone protection and planning. It is one of the features of the Select Committee system that, almost as soon as a Committee embarks on an inquiry, there is a flurry of activity in the Departments involved and a rationalisation of existing policies. If the Committee achieved nothing else, that is a powerful achievement to its credit.
Equally welcome was the Government's response to the Committee's report that was published last July. That document is a considered and well-written response, and we were heartened to read that the Government considered our report to be
a valuable contribution to the debate on coastal zone protection and planning.
The Government accepted several, although not all, of our recommendations. In particular, we were pleased that they accepted the need for local coastal management plans as a vehicle for implementing national policies and for such plans to be incorporated into the statutory plan system. The intention to promote multi-agency estuary and coastal management plans is most welcome.
It is encouraging that the Government accept that strategic consideration of environmental issues must cross the land-sea divide. While not wholly in accord with our recommendation to extend local authority planning powers to the 12-mile limit, the Government agree to "take the debate further" by issuing a discussion paper. We are told that the paper will also consider the form and scope

of coastal management plans, and we look forward to receiving the Government's proposals for consultation in due course.
We were also encouraged that the Government agreed to consider the Committee's views in their review of the marine aggregates licensing procedures and their review of the mineral planning guidance note 6 on the provision of aggregates. We were pleased to learn that such a review would also discuss the continuing role of the Crown Estate in that matter.

Mr. A. J. Beith: Will the hon. Gentleman recognise that one thing that ought to be considered in that review is the situation at Druridge Bay in Northumberland, which was drawn to the Committee's attention, where sand continues to be dug from the beach on the basis of a planning decision granted on appeal decades ago and the Government still consider that the local authority should find what might be unlimited sums for compensation arising from a decision that it never took?

Mr. Jones: The right hon. Gentleman would not expect me to go into detail on a constituency point, but there are deficiencies and I believe that my hon. Friend the Member for the Isle of Wight (Mr. Field) wants to go into that if he catches Madam Speaker's eye. That is the purpose of the review and I hope that these issues will be addressed.
The Government are also reviewing permitted development rights accorded to the port and harbour authorities under the General Development Order and will consider subjecting certain activities to environmental assessment, which I welcome. The Government agree with the Committee that the application of environmental assessments in the coastal zone could be improved.
Other areas where the Government and the Committee are of the same mind include, first, the value of "controlled retreat" as an attractive option in certain cases, and the need to support research and development in this area; secondly, the extension of grant-aid provision to beach management schemes as well as capital coastal works—we found that the existing grant system favoured "hard" engineering works above the more environmentally-friendly "soft" works; thirdly, better protection for conservation areas that straddle the interface between land and sea, especially in the context of the new European Community habitats directive; fourthly, the advantages of protective ownership for coastal land in achieving conservation objectives; and fifthly, the need to clarify the role of the many agencies involved in monitoring, regulating and cleaning up marine pollution.
Finally, in response to our recommendation for greater co-ordination of information and research on the coastal zone, the Government produced a most useful summary of the various information networks and databases operated by different bodies, and as such represents a source of reference in its own right.
There were, of course, several of the Committee's recommendations that the Government rejected, and these remain outstanding issues for debate. For example, we were disappointed that the Government saw no need for a national coastal strategy. We urge the Government to reconsider this matter, since a national strategy is essential for setting long-term objectives and targets for coastal policy and for providing an overall framework for coastal management plans. The recent planning policy guidance


on coastal planning, although a welcome development, is no substitute for a national coastal strategy that sets out policies and priorities and guides the allocation of national coastal resources and local coastal plans.
The Government also refused to accept the Committee's argument that there is widespread duplication of responsibilities or poor co-ordination between the many bodies involved with the coast. While it acknowledges the need for a national overview of coastal policy, it rejects our recommendation for the creation of a national coastal zone unit, arguing that co-ordination can be achieved via the existing interdepartmental group at official level. I find it difficult to accept that as we shall find it difficult to monitor the work of this group because we understand from the Minister that it will meet in private.
It came as no shock to the Committee that its recommendation that coastal defence policy be taken away from the Ministry of Agriculture, Fisheries and Food was rejected outright. Nevertheless, we still believe that coastal defence is no longer an appropriate MAFF responsibility, and that the Department of the Environment would provide a more suitable lead on coastal defence issues, operating through the National Rivers Authority.
May I, Madam Deputy Speaker, welcome you to the Chair at this point, as I know of your particular interest in the coast. It is rather ironic that I should open this debate since I believe that my constituency of West Hertfordshire is about as far from the coast as it is possible to be. But of course the maritime tradition of our nation is such that nearly all of us have a particular interest in concern about the marine environment. We stated in the opening sentence of our report:
Coastal zone protection and planning cannot be reviewed in isolation; they are inextricably linked to the administration and management of the many activities and uses of the coastal zone".
We were therefore most concerned that, although the Government will accept boundary and membership changes to the existing coastal groups, they rejected our recommendation for these groups to extend their chiefly engineering role to include coastal zone management. In our view, that represents a failure to integrate coastal defence with the other elements of coastal planning and protection.
The Government rejected the Committee's recommendation that coastal zone plans be based on natural coastal "cells"—on the ground that it was not a practical approach. I am not sure what a practical approach is, if we are to be permitted to pursue diametrically opposed policies on, for example, the north and the south sides of the River Dee because the local authorities concerned happen to have different ideas of what the major tasks for their areas are.
Several developments have taken place since the report was written and the Government responded to it, and I shall now deal with those. The first key development since the Government's response was the publication in September of the planning policy guidance on coastal planning. That is to be welcomed, because it is exactly 20 years since the last planning guidance on coasts was issued. In general, it will be most useful for local planning authorities, but if the Government had chosen to adopt coastal zone management in full that would have promoted a more integrated approach by giving coastal zone management plans a higher profile.
Secondly, the Government have included a section on the coast in the second-year report on "This Common Inheritance". Thirdly, "Agenda 21", from the Earth summit, supports coastal zone management. Fourthly, the Public Accounts Committee published its report on coastal defences in England on 26 November.
We are also aware that earlier this month the Ministry of Agriculture, Fisheries and Food endorsed support for a more environmental approach to coastal defence, such as facilitating "soft" defence measures—for example, beach replenishment—as part of the strategy for flood and coastal defence currently being developed in consultation with other organisations, which MAFF intends to publish next spring.
I was encouraged by the launch of English Nature's Campaign for a Living Coast on 14 October. That is a long-term conservation programme for the maritime environment, which sets up three task groups to tackle the main problem areas—coasts, estuaries, and marine conservation. Finally, any day now we should receive MAFF's environmental guidelines for coastal works and the guide for local authorities to good practice on coastal planning from the National Coasts and Estuaries Group.
I said that there were a number of outstanding issues, and I shall tackle those now. Judging from the number of developments that I have listed, it is significant that so much has happened since coastal policy came under the scrutiny of the Select Committee on the Environment. Many of those developments were already under way when we began our inquiry, but I should like to think that the Committee has helped to raise the profile of the coastal zone, and contributed to the rate at which coastal initiatives have progressed.
Having painted a fairly full picture of the current coastal scene, I shall now pursue a few issues which I hope that the Minister will consider in his reply. From the United Kingdom angle, although our report made it clear that our findings and recommendations were focused on England and its shared estuaries, we trusted that they also had a nationwide relevance and would be considered for application throughout the United Kingdom. I therefore ask my hon. Friend the Minister to clarify the position in Scotland, Wales and Northern Ireland and to explain the Government's intentions on coastal policy in those countries.
The Government have clearly rejected our proposals for regional coastal zone management plans. It is interesting that, nevertheless, MAFF is encouraging coastal defence authorities to form coastal groups to share experience and develop a strategic approach to coastal defence in their areas, and has also given grants towards regional coastal defence studies, to allow a strategic view to be taken of the options available. It appears that although coastal defence may develop along regional lines, coastal zone management may not.
English Nature supports the Committee in advocating a regional approach to shoreline management, which should include activities other than simple coastal defence. It also supports the restructuring of regional coastal groups to reflect natural rather than local government boundaries. I ask my hon. Friend to clarify that apparent anomaly in the Government's thinking. If he is not prepared to move on the issue of regional coastal zone management plans, will he tell us whether he is prepared to


compromise by producing regional policy statements or guidance that reflects the different priorities and problems around the United Kingdom?
As the Government have until today set their face against any national overview of coastal zone management and against regionally based plans, but have proposed to encourage the preparation of local management plans for particular stretches of the coast, will my hon. Friend the Minister explain what form that encouragement will take? If the Government are not going to do anything at national level, surely they must be prepared to assist local authorities and other agencies at local level.
We know about the resources that have gone to English Nature for estuary plan support. The Department of the Environment also supports the Mersey estuary plan study through the Mersey Basin campaign at £15,000 over three years to be matched by local authorities, by English Nature and by the National Rivers Authority. The Committee visited the area during our study tour of coastal sites in Sefton. There is much criticism that the level of resourcing will not achieve progress at a sufficient rate despite the considerable enthusiasm among the groups now formed for all the major estuaries in the north-west.
At the European level, the EC has been relatively quiet on the subject of coastal policy, although we are aware that the Commission is preparing a
comprehensive strategy on integrated management and planning of the Community coastal zones.
Will my hon. Friend bring us up to date on what progress has been made under the United Kingdom presidency of the European Council to develop policy in that area? Is he encouraging EC development proposals on coastal zone management, for example?
On marine conservation legislation, it appears that the Government envisage a non-statutory system, based on marine conservation areas, for some form of management plans and something statutory for sites that need protection under the habitats directive. How will the Government address sites that are important but not of habitats directive standard? Are they to be left to voluntary arrangements, for example, or will they be covered by legislation designed to fulfil the habitats directive?
Planning offshore is also an important issue. The Government said that they would look at the planning system offshore, but in their response to the Committee, they also said that the role of the Crown Estates Commissioners needed to be reviewed only in the case of licensing marine aggregates. As the role of the Crown Estate Commissioners and planning offshore are intimately linked, I do not see how the Government can review one without reviewing the other. Perhaps my hon. Friend the Minister will explain the Government's position on that point.
As I have mentioned, the Government gave a commitment to review the permitted development rights of ports and harbours. Will my hon. Friend tell us the Government's time scale for that? Will he also tell us whether the review will cover only projects requiring environmental assessment or whether it will be wider ranging than that?
The Government agreed with the Committee that there is a need to identify areas at risk from flooding, but they

took cover behind their flood risk circular and the work of the National Rivers Authority's Anglian region. It is the NRA which needs to define risk areas, but that is not only a coastal issue, as recent events have shown. I speak rather bitterly, as my own house was flooded in the September floods. Many NRA regions are not able to define up-to-date flood risk areas for incorporation in development plans. One study in East Anglia is all very well, but will my hon. Friend the Minister tell us what is happening in the rest of the country? Is the NRA sufficiently resourced to provide local planning authorities with reliable data that can stand the test of planning appeal inquiries?
The Government have taken some welcome first steps towards a more considered and co-ordinated approach to protecting and planning the many different activities and issues in the coastal zone. However, we are left with the impression that the main thrust of the Committee's report has been somewhat sidestepped. The Government can be accused of failing to take the plunge into a truly holistic approach to coastal zone management and its delivery through a hierarchy of plans that deal with all relevant issues in the coastal zone within meaningful coastal cells. A system such as the one that we recommended would form the linchpin of integrated protection and planning of the coastal zone. Anything else may be determined to be paddling around the edge.
The coast and its protection are important issues for the whole country and not simply for people who live on the coast. Our natural environment there, the facilities for those who spend their leisure time there and the interests of those who have homes and land in the region of the coast are matters for us all. I hope that this debate will provide an ample opportunity to discuss the Committee's thoughts and hon. Members' thoughts in the right context.

Mr. Gareth Wardell: I welcome the report of the Select Committee on the Environment, and I am delighted to follow the hon. Member for Hertfordshire, West (Mr. Jones) who, in his inimitable way, summarised excellently the main points in his Committee's report and in the Government's response to it. I welcome the hon. Gentleman to the Chair of the Select Committee. I am sure that he will follow in the footsteps of his great predecessor in that position and do a tremendous job.
I hope that the Government will do more than pay lip service to the Committee's recommendations. I welcome some of their positive responses but I hope that, following the report on the need for greater protection and planning, their commitment to implementing their promised responses will be much greater than it has been in the past.
My interest in coastal protection relates to the undermining of the marine and coastal environment by the dredging of sand and gravel. In 1990, the Llanelli Sand and Dredging Company applied for a licence to extract 100,000 tonnes of sand a year from Helwick bank, a sand bank just off the south-west point of the Gower coast. It was the first time that the Welsh Office had dealt with an extraction licence application under the Government view procedure. We had great hopes that Wales would take a lead in meeting environmental demands, especially as evidence given at the Environment Committee's sittings was already highlighting inadequacies in the procedures for issuing licences. However, the Secretary of State for Wales gave a


favourable view on the application at the end of October—three months after the Government's response to the Select Committee was published.
I wish to use the example of the licence application at Helwick bank to make three points. First, the way in which the Welsh Office responded to the application says much more about the Government's real attitude to the marine aggregate licensing system than do the promises that they set out in annex A of their response to the Committee's recommendation for a review of the approval process for marine-dredged minerals.
Objections to the issuing of licences at Helwick bank reflected a wide range of informed opinion, including the county council, district and community councils, the south Wales sea fisheries group, the Swansea bay coastal group. the National Rivers Authority, the National Federation of Fishermen's Organisations, the National Trust, the Committee for the Protection of Rural Wales and other local conservation groups.
What we all wanted was an environmental assessment before any extraction took place. Sand and gravel take so long to form that they cannot be regarded as a renewable resource. We wanted to know the estimated amounts of exploitable sand and gravel that were in place. We wanted to know what, exactly, was the resource of Helwick bank. We wanted to know about Helwick as an ecological resource.
Two detailed research studies undertaken at Swansea university showed that the sand bank was ecologically important in terms of marine habitat and the food chain. The bank is one of those many spots that the Ministry of Agriculture, Fisheries and Food may not designate as a significant fishery. Nevertheless, it provides an additional source of income for a few local fishermen who trawl for regular, if not frequent, catches.
We wanted to know about the environmental resource that Helwick comprised. What was the relationship of the bank to the headland, to the shifting sands of the sea bed and to the local beaches, which had definitely been losing sand over a long period? Such information was crucial to the coastal protection of the first area of Britain to be designated as one of outstanding natural beauty.
In annex A of the response to the Select Committee's report, the Government promise to ask for appropriate information to support licence applications, including an environmental statement. That document was published in July this year. The Welsh Office gave a favourable view to the Helwick bank application at the end of October—all of three months later. So much for promises. I hope that the Government's other promised reforms in respect of dredging will be more meaningful.
By not insisting on an environmental assessment before extraction began, the Welsh Office has ensured that it has no baseline against which the information provided under the monitoring conditions can be judged. The strict monitoring conditions will be meaningless because we shall not know what we have before it is subjected to enormous upheaval or destruction. It is impossible to measure how high one has jumped if one does not know where the floor is at the outset.
Sand levels on beaches will be elaborately monitored, and I am glad of that. But let us not fool ourselves: if aerial photographs show that a foot of sand has disappeared from Oxwich bay in six months, no one will be able to prove that dredging has caused it. No one will be able to stop the operations once they have been approved. If the

number of bass caught falls in a year or two, no one will be able to prove that stocks are lower because of the destruction of one of the bass nursery areas and feeding grounds at Helwick bank.
Although the Secretary of State for Wales has imposed on the Llanelli Sand and Dredging Company a limit of 100,000 tonnes a year for four years, we must remember that that company is only the first to arrive on the bank. We know that others are waiting to apply for licences. What conditions will be put on those?
That brings me to my second point, which concerns the role of the Crown Estate in the Government view procedure. The Crown Estate has repeatedly said that it wants to move away from its quasi-planning authority role and concentrate on its role as landlord. That was the position that it took in its evidence to the Select Committee.
The Crown Estate is placed in an invidious position in the Government view procedure. As it pointed out in evidence to the Select Committee, the Crown Estate has never gone against a Government view and has always imposed the conditions that the Government had suggested. In practice, therefore, it is the Government who decide whether an extraction licence will be issued. That means that the Government take the credit for an unfavourable view but, as the Secretary of State for Wales told me in a letter dated 8 January last year:
it is for the Crown Estate Office to grant or refuse production licences
when the Government's view is favourable. That means that the Crown Estate never gets the credit but always gets the blame for decisions.
I must say that we in Gower regard the Crown Estate as a rather complacent landlord. I do not know many landlords who are so casual with their assets as not to want to know exactly what they are and to maximise their value, but that is how the Crown Estate manages its marine aggregates. If it wants to emphasise its role as a landlord and forgo its purely theoretical role as planning authority for licensing, the Crown Estate should take on the responsibility for managing its own resources. It should assess resources such as Helwick bank, and provide studies, research, information and projections for each project. It should undertake an environmental impact assessment and state, at the time of applying for permission for marine extraction, how much aggregate a year is to be taken, for how many years and by how many sub-contractors.
In short, the Crown Estate should commission a national comprehensive picture of marine aggregate. resources and should develop a strategy for extraction which has due regard for ecological, environmental and coastal protection. Such a management system would work much better in the interests of administrative and economic efficiency, in maintaining uniform and high standards and in maximising the value of the resource.
As I have said, other companies are expected to apply for licences to dredge on Helwick bank. How will their applications be evaluated? How can the expensive monitoring programme forced on the Llanelli Sand and Dredging Company possibly have any meaning if another company comes along and dredges another 100,000 tonnes a year—and another, and another? Will all the companies carry out monitoring? If not, why should the Llanelli Sand and Dredging Company pay out just because it was the


first applicant? Or has it been given a monopoly for dredging on Helwick? One can see the confusion which arises when one really looks at this can of worms.
Finally, I want to comment on that part of the Select Committee report which refers to the confusion in coastal protection and coastal planning between the roles of the Department of Environment, or in Wales the Welsh Office, and local authorities. Again Helwick bank provides the illustration. As one of the funding authorities for the Swansea bay coastal study, which shows that not nearly enough is known about the marine environment to permit dredging, Swansea city council was an objector to the licence application. The city wants to prevent dredging at Helwick bank until more is known about coastal erosion in the area. On its own evidence, the city council has a duty to prevent dredging because it is a coastal protection authority.
The council therefore looked to section 18 of the Coast Protection Act 1949 to make an order
prohibiting the removal of any material on, under, or forming part of the sea shore within their area, or of the sea shore lying to the seaward side of the area but within three nautical miles thereof.
Before any such order can be made, however, the council must prepare and publish a draft order. In the event of any objections—one would expect the dredging company at least to object—the Secretary of State may convene a public inquiry. In other words, in practice it is the Secretary of State who decides the application. As he has already given a favourable view in this case, the Secretary of State will not agree with the city council.
In the response to the Select Committee report, again at annex A, the Government say that they will look at the roles and interaction between the owners of the sea bed, central Government and local authorities. The case of Helwick bank shows the need for such an examination and for remedies to deal with contradictory and inadequate procedures. You, Madam Deputy Speaker, will understand why my constituents in Gower were so disappointed about the Helwick bank decision. We shall be watching with as much interest as the Select Committee to see how quickly the Government will honour the promises that they have made in response to the Select Committee report.
I hope that improved procedures will be in place before the next company applies for a licence to dredge at Helwick bank off my constituency of Gower.

Mr. Barry Field: I congratulate my hon. Friend the Member for Hertfordshire, West (Mr. Jones) on his election as Chairman of the Select Committee on the Environment. Following, as he does, in the footsteps of such an illustrious predecessor, I am sure that he too will earn an enviable reputation as a guardian of the nation's environment.
I welcome to our debate this evening my hon. Friend the Minister for the Environment and Countryside. I believe that I am correct in saying that his is the first response in this Parliament to a Select Committee report, which shows, as always, that he is pre-eminent in spotting a trend.
Only the other day I followed him during a water meter debate in which he put forward the novel suggestion that

we should re-use our bath water in domestic dwellings to preserve that necessary natural resource. I have to tell him that such is the infrequency of that activity in my household by my children that were he to see what they leave behind in the bath his Department would be more likely to license bath water as a dangerous substance rather than wishing it to be recycled.
My hon. Friend the Member for Hertfordshire, West made two points which I want to develop. One concerned marine aggregates and the review of the mineral planning guidance note number six, as well as the review of the continuing role of the Crown Estate in that area. The second concerned the Government's consideration of the planning system offshore. My hon. Friend rightly highlighted the role of the Crown Estate and its involvement in planning offshore and asked the Minister to clarify the fact that the Crown Estate's role in planning was not to he reviewed.
I want to pick up those points and develop them further as well as drawing attention to the absence of any reference in planning police guidance note number 20, so recently issued, to the dumping of dredged material, as highlighted in paragraph 97 of the Select Committee's report. The highlighted comment says:
We recommend that there should be better co-ordination between those authorities responsible for dredging, disposing of and utilising marine aggregates in order to avoid the unnecessary dumping of dredged material, and to encourage its use elsewhere as appropriate. In addition, we recommend that environmental impact assessments be made of the possible effects of dumping".
I deliberately drew attention to that omission earlier in the debate so that the Minister's officials would have sufficient time to address the point. I hope that my hon. Friend the Minister will consider that as a helpful move on my part.
Planning policy guidance number 20, paragraph 2.21, mentions the dredging of marine aggregates but says:
Projects which require consent outside the planning system, such as dredging of marine aggregates, are subject to environmental assessment where appropriate under the relevant consent procedures.
But it does not include any environmental assessment for the dumping of dredged material. Paragraph 3.1 mentions waste water and sewage disposal, but there is no mention of dredged material. I hope that the Government will be able to set out the reasons why the taking out of aggregate rightly requires an environmental assessment, but the dumping of dredged material does not.
As was regularly mentioned in evidence to the Select Committee in preparing its report, the Isle of Wight has set an outstanding example in the setting up of the Standing Conference on Problems Associated with the Coastline—SCOPAC for short. I am very much obliged to David Court, chairman of the officers working group, which includes most, if not all, of the surrounding coastal authorities from West Sussex in the cast along the coast to Portland in the west.
I am pleased to be able to tell the House that officials from the Department of the Environment, the Ministry of Agriculture, Fisheries and Food and the National Rivers Authority attended the SCOPAC conference in October in Littlehampton. However, the feeling remains that the opportunity to clear up the duality of those Departments as regards the coastal zone has not been grasped. Indeed, the omissions on the dumping of dredged material are perhaps one manifestation of the problem caused by that duality. There are others. For example, coast protection is


the duty of the local authority, whereas sea defence is the duty of the National Rivers Authority. It is true to say that good will helps and I am certain that my hon. Friend the Minister will say that in his reply to the debate. However, the duality must militate against efficient and effective working. Indeed, the Royal Society for the Protection of Birds believes that the decision-making process needs to be restructured, and land drainage and sea defence legislation reformed, to reflect urban development and nature conservation priorities.
Will my hon. Friend the Minister review the role of the internal drainage boards with regard to their conservation duties, as recommended by the Select Committee? Lest anyone forget why that is so important, I remind the House that our sea bird breeding colonies are of global importance, as a significant proportion of the world populations of some species are present here. Of the 261 internationally important bird areas in the United Kingdom, 28 qualify because they hold more than 1 per cent. of the European population of certain sea birds. The United Kingdom's estuaries are among the most biologically productive systems in the world. Estuaries also provide spawning and nursery grounds for fish, including many of commercial value, and are key areas for water-borne and waterside recreation. In spite of that importance, coast management is piecemeal and unco-ordinated.
The British marine aggregate producers want prospecting licences to be left with the Crown Estate and production licences placed with the Department of the Environment. They believe that that would avoid the lengthy duplication inherent in the present system. That was the view that the industry expressed to the Department of the Environment review which was recommended by the Select Committee report. If that view prevails, it will become even more important for the Department of the Environment to practise open government in that area, and for data from the assessing hydraulic authorities to be doubly scrutinised and made public. Why? Because, otherwise, the Department will be both policeman and provider: it sets out the aggregate material forecasts for the building industry and is the lead Department for the needs of the construction industry. It cannot wear two hats without misgivings and mistrust. During the 1980s and into the 1990s, the great success of Government policies in protecting the environment has been to separate the policeman and the provider, which has led to far higher standards.
The fact that so many coastal communities are seriously concerned about inshore or near-shore aggregate dredging sets my hon. Friend the Minister a special challenge—to make decisions more transparent and capable of proper scrutiny. That is what the Select Committee was endeavouring to do. There is an example in the western Solent at the moment, with the prospect of 300,000 cu m of gravel being taken from the Shingles bank by the New Forest district council, which has submitted the scheme on behalf of English Heritage, which wants to replenish Hurst Spit to protect Hurst castle.
Local fishermen tell me that the Shingles bank has a sheer wall, and that if one takes 300,000 cu m of gravel out of that structure it will cause serious harm. So far as I am aware, the bank has never been dredged effectively. That is a good example of the sort of misgivings that local communities may have.
On consolidation and planning, if I understand correctly the Department's response to the Select Committee's comments, the Minister is saying that consolidation is not on the agenda because of the recent consolidation of planning law. I may be wrong, but I thought that the Committee wanted consolidation in several areas. I draw my hon. Friend's attention to that matter, because I do not think that the Committee was restricting its remarks on consolidation to planning.
The Royal Yachting Association has rightly pointed out that the planning system does not cater for the needs of increasing numbers of people to take part in water sports. The French have added more than 7,000 marina berths between Le Tréport and Cherbourg during the past few years. Why do we British not want to exploit the same opportunities in a structured and sensitive way which will meet the needs of all the competing interests?
I have no doubt that the Minister will again point me towards planning policy guidance note 20, paragraph 4.17, which allows planning authorities and other agencies to co-operate. I must inform my hon. Friend that the planning inspector's ruling, at the Isle of Wight replacement structure plan inquiry, was that they are not required to do so. While adjoining land-based authorities must interlock, there is no such presumption when water intervenes.
My hon. Friend the Minister will find copious correspondence on the subject between myself and Mr. Christopher Chope, who served so illustriously in the House. It is ludicrous that the Isle of Wight has no mechanism for influencing the means of departure from, or arrival at, the mainland—England. That is why we are so poorly served. If one arrives from Brussels or France it is different, but not if one comes from within one's own country.
The consolidation sought by the Select Committee was surely not merely on planning. The Merchant Shipping Act 1984 requires that all objects recovered from below the mean low water mark should be reported to the Receiver of Wrecks. That system does nothing to preserve sites of historic interest, because, if the item is unclaimed, the Crown encourages auction as a means of rewarding the finder. Just imagine the hullabaloo if people were allowed to dig around designated land-based sites in the same way. Sadly, it would appear that the Department is unable to get its mind around that fact.
Mineral extraction on land would never take place without, where appropriate, an archaeological evaluation. That requirement is contained in policy planning guidance note 16, which was issued last year. There is no such safeguard below the mean low water mark: why not?
Development often requires the dumping of material or building on the sea bed. Such activity can do untold damage to our nation's heritage. Again planning policy guidance number 16 can only be invoked once the construction has risen above the mean low water mark.
The Protection of Wrecks Act 1973 offers some protection to a limited number of wrecks which are deemed to be of national importance. The Act is not, and cannot be, used to protect archaeological sites which lie below the mean low water mark. The Ancient Monuments and Archaeological Areas Act 1979 has never been applied to underwater sites in England.
Planning policy guidance note 16 is serviced by sites and monuments records so as to intercept threats to sites of significance, yet the constraints of local government


boundaries at mean low watermark impede that process. As the hon. Member for Gower (Mr. Wardell) pointed out, under section 18 of the Coastal Protection Act 1949, local authorities can, by arrangement with the Crown Estates Commissioners, take control and licensing powers over the sea bed.
The evidence given to the Committee and the replies to some of my questions eventually elucidated the fact that, in the whole of England and Wales, only South Wight borough council on the Isle of Wight is using those powers. The departmental evidence revealed the real confusion that exists over the matter.
Hon. Members may wonder why I have spent so much time dealing with these points. As the Minister will confirm, his Department was the lead body at the summit on the environment at Rio and takes a keen interest in the rise in sea level that has been forecast. The flooding of the Solent concerns an area so rich in archaeology that experts believe that it might yet mean land sites being delisted because of their relative insignificance compared with the Solent.
In view of the Minister's well-known interest in global warming, he will be interested to note that it has been shown from the excavation of Roman artefacts dating back 6,000 years that there has been a rise in sea level in the area over that time of 3 m. Artefacts found there include hand-made cooking pots ranging from the eighth to the 11 th centuries. An important cultural item from the period is a copper alloy cloak pin of the loose-ringed type. The decoration of the pin draws its inspiration from Viking dress fasteners, while its type can he equated with pins in use in Ireland between the 10th and 13th centuries. The pin signifies long-distance maritime trade and should be seen in conjunction with two contemporary Norwegian mica-schist honestones that have been removed from the Solent.
As the Minister will be aware, the Department of National Heritage has recently succeeded in gaining control over the export of fossils, remembering that the Isle of Wight is considered to be the best archaeological centre for the discovery of fossils and dinosaur bones in the whole of the northern hemisphere, if not of the world. It is a little-known fact that only one of all the dinosaurs at the natural history museum is the genuine article, and I am proud to say that it comes from the Isle of Wight. [HON. MEMBERS: "Hear, hear."] I note that I strike a chord across the Floor of the House when I talk of dinosaurs.
This is a serious matter because the Minister may not be aware that along the coast of the Isle of Wight, where the wave action exposes the remains, pirates come to the island and dig up the bones at night, since a single bone of the right variety can fetch over £100,000 on the black market. Not only is it a serious problem, but it is another reason why the Committee sought to extend the protection of land-based legislation to our wonderful aquatic environment. Perhaps such facts speak more forcefully than the Select Committee report, the RSPB, SCOPAC or any other body.
I hope that the Minister will re-examine the whole issue and will put his rudder hard over, go about and ask his crew to look again at the legislation and the whole area to which I have referred. Does Britannia rule the waves? I

regret to say that for a maritime nation, if we in Whitehall do not waive the rules, we are certainly refusing to enforce them.

Mr. Paul Tyler: I hope that the hon. Member for the Isle of Wight (Mr. Field) will forgive me for not going back to the era of the dinosaurs. I want to look forward. I am grateful for catching your eye at this time, Madam Deputy Speaker, because last night and the night before I managed to do so just before midnight. It is a privilege for me to be addressing the House in prime time.
I am also grateful to have been called because—as you know, Madam Deputy Speaker, being a close neighbour—I am lucky enough to represent the most beautiful and one of the longest coastlines in the United Kingdom. For that and ancestral reasons, I regard this as an extremely important debate and, like other hon. Members, I pay tribute to the pioneering work of the Select Committee and its Chairman, the hon. Member for Hertfordshire, West (Mr. Jones).
Cornwall and Devon have some of the finest coastline and most beautiful coastal waters in the United Kingdom. We have the Fal, the Fowey, the Camel, the Tamar, the Teign, the Torridge, the Taw and the Exe as world-famous estuaries. In addition, we have a coastal zone inland from that coastline which is recognised as being of international importance.
The coastline also has an economic importance because it is an area for fishing and tourism and supports two of our most important local indigenous industries. A well kept coast is not just a thing of beauty: it is an extremely important economic asset. The many thousands of tourists who come to Cornwall, Plymouth and Devon are drawn by beautiful images of lovely places of natural and human manufacture. Tintagel, Padstow and the Newquay area of my constituency are examples, but they are replicated throughout the south-west. It is vital, for every reason, that they receive the care and attention that an orderly, clean and well managed environment should provide.
But we must also demonstrate the vulnerability of the coastline. As hon. Members from places as far apart as Gower and the Isle of Wight have demonstrated, the vulnerability of the coastline is its other special characteristic. We have in Cornwall the continuing saga of governmental incompetence over Weal Jane, as often described by the hon. Member for Truro (Mr. Taylor).
The United Kingdom coastline is the habitat of an extraordinary range of animals and birds. The sea bird breeding colonies are of global importance, with significant proportions of the world's population of some species. Our estuaries, as the hon. Member for the Isle of Wight said, provide the most biologically productive systems in the world. They also provide spawning and nursery grounds for fish stocks, including many of considerable commercial value. They are key areas of income generation in respect of waterborne and waterside recreation.
Despite that importance, and despite all the evidence to, and recommendations of, the Select Committee, we still have a totally piecemeal and unco-ordinated policy for our coastline. At present, the responsibility for coastal zone management is split between a ridiculously large number of bodies. Earlier in the year, I tried to discover exactly


how many Ministers had responsibilities relating to coastal policy. Finally I discovered that the full list—I will not bore the House with the details; there are 12 or more—ranges from the Department of National Heritage to the Ministry of Defence, via the Duchy of Lancaster and the Ministry of Agriculture, Fisheries and Food.
That does not even display the whole iceberg: it is only the tip. Underneath the surface is an absolute plethora of statutory bodies with responsibilities, such as the National Rivers Authority, the Countryside Commission and the whole range of local authorities and harbour commissions. There are significant differences in hierarchy on the other side of the borders in Scotland and Wales.
At central Government level, differences of approach that seem to result from that dichotomy between the Department of the Environment and the Ministry of Agriculture are ably demonstrated by the current approach to the implementation of the EC's habitats directive, which should cover both the terrestrial and marine environments, yet seems to be delayed. We hope that the Minister will say that both Departments will make comprehensive statements on that directive.
Local anomalies also exist. It was recently drawn to my attention that the siren system around the Norfolk coast, originally introduced to warn of impending invasion but used more recently to warn of possible tidal flooding, is about to be discarded by the Home Office, yet no other Department is prepared to take up that responsibility. To load it on to local authorities will cause difficulties if they do not have the necessary resources.
Many coastal communities throughout the country are threatened by coastal erosion, possibly brought about by the climatic changes as a result of global warming. If that is so, it will be an increasing problem for local authorities to tackle, especially as it tends to happen in areas of comparatively low income.
Even the National Rivers Authority's income will be unable to deal effectively with that. The problem can exist anywhere in the country, from Lower Hawkesbury in the constituency of my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) to Downderry in south Cornwall. Those problems suffer from a lack of effective co-ordination and resourcing.
In that context, this debate is timely. The Select Committee's report was excellent, and the Government should say what they are thinking, following their response to that report. I hope that we shall give the Minister much food for thought for his Christmas break. Incidentally, if his plans are still fluid, I recommend an excellent fish restaurant with rooms at Padstow in which he could digest the points made this afternoon.
Two points result directly from what the Government said in their paper, "This Common Inheritance—the Second Year Report":
Decisions about development should take account of the natural resources which Britain's coast provides.
In that context, I want to concentrate on coastal zone management plans and the special place that we should afford to heritage coasts.
First, both sides of the House echo the words of the Select Committee Chairman, the hon. Member for Hertfordshire, West, about the clear need for a national strategy. It is not in place and does not look as though it is coming, and we need it urgently. All the organisations concerned should be singing from the same hymn sheet. There are so many of them that that is the only way in

which we can secure some cohesion and comprehension. There is a cacophony of conflicting policies, which must be set in a sensible context.
It was illuminating that, when the Marine Conservation Society conducted its survey on coastal management plans in 1990, it found that the most widely expressed concern was about the lack of a national policy or strategy. It is now clear that the demand for one is intense, and I hope that the Minister will respond to that this evening.
Similarly, we need a discrete unit within the Department of the Environment and the Scottish, Welsh and Northern Ireland Offices to develop and co-ordinate that national strategy, because a strategy without such a back-up would be meaningless. In view of the Government's support for the concept of coastal zone management, will the Minister consider setting up such a unit linked to the other Departments, as the Select Committee recommended?
There seems to be a contradiction in the Government's thinking. Virtually all the evidence to the Select Committee spoke of the need for planning to be carried out on the basis of natural coastal cells—the ones that exist and are recognised. In the Government's response, they argued that coastal cells
provide a useful basis for the formation of groupings of local authorities and other interested parties for the consideration of physical processes at the coast and co-ordination of coastal defence issues".
The adjoining paragraph went on to say that the coastal cells are not an appropriate basis for decision-making and management. So what is the Government's view?
Coastal zone management should be designed to provide a management framework for the whole coastline, not simply areas under pressure. Those plans need a statutory basis if they are to provide the necessary powers to resolve conflicts of interest within the coastal area.
If, as the Government suggest, those plans are not to be universal or mandatory and an ad hoc system of coastal planning results, we forecast chaos in future. The conflict of interests and the problems will not be resolved even within a managed framework if that framework is piecemeal. They will simply migrate along the coast from more progressive local authority areas with management plans to those that are not covered by plans.
As a result, new areas of what the Select Committee described as "demonstrable conflict and pressures" will undoubtedly result. The problems described by the hon. Members for Gower (Mr. Wardell) and for Isle of Wight in relation to marine aggregate could arise if the approach were piecemeal instead of comprehensive.
The finest stretches of coast clearly deserve national recognition as heritage coasts. Although some have already been designated and are recognised on an international or European basis, they must be given effective protection and management. It is now necessary to ensure that stronger measures are available and apply there.
The quality of the heritage coast and the principles and techniques of management and protection that underpin them already provide a model that attracts that wider international interest. Other European countries wish to learn from our experience and, in turn, heritage coasts are recognised as having a quality that stands international comparison.
However, we cannot be complacent, because the mechanism of designation and management techniques


leave much to be desired. We need rigorous control, which must he exercised to preclude all forms of development that are incongruous in an area of fine natural beauty by reasons of scale, siting, design, noise, disturbance or traffic, or that could adversely affect heritage features such as flora, fauna and archaeology. We must ensure that remote stretches of coast and access to them are also carefully managed.
Clearly, it is necessary to integrate the policy for heritage coast planning with management of the wider undeveloped coastline. Heritage coasts cannot be protected by action simply within their immediate boundaries, because their future will be bound up with coastal policy as a whole, and a holistic approach will be necessary. The Government need to move quickly to review the role of local authorities in planning and development control below the high water mark. I call on them to set that in motion urgently.
Whatever happens, it must be right that all that should not come about simply by creating more bureaucracy, quangos and by-passing directly elected and accountable local government. The necessary structures already exist within the tiers of local government. The Chichester harbour conservancy group is but one example of the way in which local government can take a wider lead, as the hon. Gentleman said. The initiative taken by the Isle of Wight county council to create a network shows that the central role should be for local authorities.
I do not understand—I think that this may be the crucial issue in today's debate—why the Government reject the concept of coastal zone management. Why do the Government reject the concept of natural coastal cells as the linchpin of an integrated protection and planning policy for coastal zones? All the evidence to the Environment Committee—and, indeed, all the evidence of our eyes and experience since that excellent report—shows that coastal zone management will be the most effective and efficient way forward. I urge the Government to reconsider their decision.
As with so many other issues in the House, in the end we must be sure that the Government will be able and willing to resource the necessary changes. We want answers from the Minister and prompt action to set in train mechanisms to bring about the widely desired changes. The coastline of Britain is a jewel in our crown, and it must be preserved.

Mr. Nick Hawkins: I suggest that few hon. Members would disagree that sea defences principally involve the protection of, first, people and, secondly, property. I welcome the fact that my hon. Friend the Minister for the Environment and Countryside and his colleagues have increasingly concentrated within the Ministry of Agriculture, Fisheries and Food on the protection that needs to be provided in urban areas such as my constituency of Blackpool, South.
Because of the problems in my constituency with elderly sea defences which are clearly crumbling away, I am especially glad to have the opportunity to participate in the debate. My concern is enhanced by the bureaucratic complexity which has been highlighted by the report of the Select Committee on the Environment and already

referred to in some detail by other hon. Members, especially my hon. Friend the Member for Hertfordshire, West (Mr. Jones).
Despite the many years of diligent work by my predecessor, Sir Peter Blaker, to ensure that sea defences were improved along the south shore at Blackpool, about which he was extremely concerned, as I am, one must concede that nothing has been done. I must evince a note of considerable concern that, if nothing is done soon, there will be substantial flooding.
My hon. Friend the Minister is concerned about such matters. I must tell him that there is a great deal of high-value property just beyond the land side of the sea wall, which is all along the shore at Blackpool. That property includes many successful and prosperous hotels and a number of high-value residential areas. It also includes the biggest tourist attraction in the whole of Europe, the Blackpool pleasure beach. More than 6 million people visited that beach last year. I mention that because the significance to such a business, to hotels and to residential areas of the sort that I have described of the kind of flooding that we have had on a number of occasions recently is substantial. My constituents and I are worried that whenever there is a flood warning, which happens frequently throughout the autumn and the winter, the only action taken is that hotels and residential areas are asked to collect sandbags from the local authority.
I recognise the importance of local authorities being able to give a local response to particular areas of need, but I echo the views of the Select Committee, as confirmed by my hon. Friend the Member for Hertfordshire, West, that it is crucial to have a national strategy for sea defences and coastal zone protection. It is also crucial to have a much simpler and more straightforward system. It is apparent not only from the report of the Select Committee, but from the National Audit Office, that about 160 bodies have some responsibility for coastal zone matters. From the discussions that I have had with local authorities, the National Rivers Authority, the people at North-West Water and departmental officials, I can only describe the situation as a bureaucratic jungle and nightmare.
Tonight I feel something like Cassandra crying in the wilderness for some action to be taken. I am sorry that I have to predict that, unless something is done urgently to improve the sea defences along the south shore of Blackpool, there will be a disaster akin to the one that took place in Towyn in north Wales in 1990. I am sure that most hon. Members remember the horrifying news pictures. I remind hon. Members that the failure of the Towyn sea wall on 26 February 1990 occurred during a violent storm from the north-west. A storm from the same direction would affect my constituency if it happened again. The storm produced a surge of 1.3 m to the tide level, coupled with 4 m waves. Frequently, there are storms of the same or similar intensity which affect the Fylde coast. My constituents and I are worried about precisely such storms.
In the Towyn disaster there was substantial damage to property as a result of salt water flooding of housing behind the breached sea wall. Although we were delighted to note that extremely efficient and prompt evacuation procedures were immediately put into effect by the emergency services—to whose work I pay tribute—which prevented any loss of life, the dislocation and rehabilitation problems were severe. The problems had not been fully resolved at the time when the National Rivers


Authority produced its report on sea defences and the advisory committee to my hon. Friend's Ministry produced its report on research and development into flood and coastal defence.
In the 1989–90 winter storms, some 30 km of sea wall revetment and about 10 km of embankment were damaged. The cost of repair and reinstatement of those damaged coastal defences has been estimated at more than £40 million, and Towyn alone accounted for perhaps 25 per cent. of that total. The amount does not include the social costs of shattered homes and lifestyles or the ecological cost of damage to beaches, dunes and cliffs. More than 150 km of coastline were severely affected by one winter night's events.
I urge my hon. Friend to re-examine with great care the report of the Select Committee and to bear in mind that a stitch in time saves nine, especially when it comes to coastal defence. I am aware that firm plans have existed for a number of years in my constituency, based on the most sophisticated technology of sea defence. My hon. Friend may be aware of the colonnade scheme. Those plans can be put into effect in a relatively short period, but, with the administrative structure that exists, and with so many bodies involved, there is endless opportunity for what I can only describe as buck passing between the local authority, the Ministry, the National Rivers Authority and water authorities.
I echo the comments of my hon. Friend the Member for Hertfordshire, West that it seems entirely logical that the matter of sea defence should be placed under the direct control of one Ministry. I know that my hon. Friend the Minister is concerned about the matter. I pay tribute to his work and that of his ministerial colleagues in the Ministry of Agriculture, Fisheries and Food. However, I suggest that it would be much more logical for the matter to be brought under the direct control of the Department of the Environment, because of the Department's other responsibilities, including many other matters which relate to coastal zones.
As the policy has rightly concentrated substantially on urban sea defences, it seems peculiar that the issue remains within the purview of the Ministry of Agriculture, Fisheries and Food. I submit that coastal defences are an environmental issue and that the Department of the Environment should deal with it.
The Coast Protection Act 1949 is now fairly old and perhaps a new statute is overdue. Under the Act maritime district councils carry out coastal protection works that have been approved by the appropriate Minister. The Environment Select Committee report points out that before they even submit proposals, maritime councils must consult the National Rivers Authority, neighbouring maritime district councils, the county council, harbour, conservancy and navigation authorities, fisheries committees and MAFF for licensing under the Food and Environment Protection Act 1985.
With so much consultation required, one can see why it takes years before a formal proposal is even considered. That applies to all works except maintenance, repair and emergency works. I suggest that fewer emergency works would be needed if the main works were done more quickly. There is frequently agreement across party divisions in areas where priority work needs to be done, including my own. A single Ministry could make a quicker

decision. Of course, there must be some consultation, but I suggest that the procedure could be made much more streamlined.
The complex bureaucracy causes problems that could have contributed to the Towyn disaster. The Royal Institution of Civil Engineers recently hosted a presentation about vital issues that affect the north-west and north Wales. It was attended by many Conservative and Opposition Members from those areas, including myself. It was interesting that the subjects that the institution chose to highlight as of particular importance to north-west and north Wales Members of Parliament were, first, transport and, secondly, sea defence and coastal protection.
Many hon. Members heard an extremely effective presentation by one of the senior scientific advisers who worked on rebuilding the sea defences at Towyn. I am sure that several of the points that he made about the urgency with which sea defences in the north-west and north Wales should be improved struck a chord with many of the hon. Members who were present. I urge my hon. Friend to look again at the work that was done in the aftermath of Towyn and recognise that a great deal more could be done.
I apologise to my hon. Friend the Minister that, because I was committed to chairing a meeting elsewhere in the House before I knew the business for this week, I shall not be present to hear his reply. However, I look forward to reading it in the Official Report.

Mr. Jack Thompson: I add my congratulations to the hon. Member for Hertfordshire, West (Mr. Jones) on taking over the role of Chairman of the Select Committee on the Environment. My experience of that Committee is such that I have full confidence in its reports and especially in the one that it has just completed.
I make no apology for examining the report and the Government's response to it in the context of my constituency. Coastal defence is a matter of great concern to me. In case anyone wonders where my constituency is, it is 15 miles north of Newcastle on the coast. The eastern boundary of the constituency is the North sea coastline.
My constituency suffers not only from the loss of some of its skilled young people as a result of the dire employment situation in the north of England but from the loss of some of its land mass through coastal erosion. The problem of coastal erosion is not a new one in my constituency. For example, the village of Newbiggin-by-the-Sea is reputed to be the third one with that name. The two previous villages are said to have disappeared into the sea many years ago, and there are fears that the present village could suffer the same fate. Cynics describe it as Newbiggin-in-the-Sea.
The village was provided with a limited form of sea defence in 1931—mainly to provide employment during the slump. That sea defence proved fairly satisfactory until the mid-1970s. Since then, there have been changes in the sea bed levels as a result of collapsing mineworkings in the bay on that part of the coast. That seriously affected and undermined the sea defences. Various projects have been undertaken to improve the sea defences, but in a piecemeal fashion. Some of the sea defences are an eyesore due to the lack of proper funding and because people have tried to do schemes on the cheap. If the Select Committee's proposals had been implemented 20 years ago, the problems would


have been alleviated properly by means of a comprehensive development rather than the patchwork schemes which now despoil an attractive village.
To the north of Newbiggin-by-the-Sea is an area described as East Sea Sands. It is a stretch of common land which has little if any defence. While some protection is provided for the village, the limitations on coastal protection allow the coastal strip on East Sea Sands to deteriorate, so coastal erosion threatens the village from a different point. That is a further example where a comprehensive plan could have resolved the problem.
When I was a youngster—I may be giving my age away—in the last years of the second world war, many old army vehicles were placed on the rock formations in the area. They were far enough out in the sea to allow the RAF to use them as target practice. Not only the vehicles but the rocks on which they stood disappeared into the sea many years ago. The erosion has taken huge areas of that part of my constituency away. If I stand on the cliff edge I can see 200 yd or more of the area which has disappeared into the sea in the past 10 years.
The overriding need for a national coastal zone unit is a major theme in the Select Committee report. I endorse that view. I would couple with it more localised co-operation. That has already begun in the county of Northumberland. Some people in my county think that the world begins at the north part of the county—the border with Scotland—and ends at the south, the border with Tyne and Wear. We have the North sea to the east and Cumbria to the west. However, I recognise that the world goes beyond that.
The authorities in my county have formed a consortium of local authorities with coastal boundaries. They are Wansbeck and Alnwick district, and Blyth, Castle Morpeth and Berwick borough councils. The consortium has been in existence for about one year. I understand that it is currently working on sea defence issues. The programme is to examine the problems all along the coast. I repeat that the problem exists beyond the Northumbrian coast and affects areas which have boundaries on each side of our county. Wansbeck district council has obtained the services of the consultants Babty Shaw to produce a comprehensive report on its coastline. Such efforts could make a useful contribution to the work of a national coastal zone unit.
I also draw the attention of the House to a further cause of coastal erosion in my constituency and in that of the right hon. Member for Berwick-upon-Tweed (Mr. Beith), who intervened earlier in the debate on this topic. I am sure that he will appreciate my support for the comments that he made, which were relevant and appropriate. However, I may also add to them. The problem is sand extraction in Druridge Bay in the right hon. Gentleman's constituency. That is close to my constituency. Sand has been extracted for about 25 years and it is estimated that 1.5 million tonnes of sand have been removed. That has seriously affected the whole coastline in both the right hon. Gentleman's constituency and mine.
Northern Aggregates, a subsidiary of Ready Mixed Concrete, was given permission to extract the sand by the then Ministry of Housing and Local Government, despite the refusal of Northumberland county council and the then Morpeth district council to grant planning

permission. As a result of the Government's decision, sand extraction on a huge scale has caused damage which may be irreparable. More notice should have been taken of local opinion. Any proposals to strengthen the power of local decision making will therefore gain my support.
I note that the Government are reviewing mineral planning guidance note 6, which deals with the provision of aggregates in England and Wales. That is welcome, on condition that the review concludes that more control should be placed in the hands of local people. I am advancing the same argument in regard to planning guidance note 3, which deals with opencast mining. I suspect, however, that my efforts will be to no avail; and by the time the review has been completed, whatever the outcome, it will probably have little effect on the specific problem of sand extraction.
The Select Committee recommendations show a reasoned and sensible attitude to coastal erosion problems. They include some extremely good proposals, including the proposal in paragraph 78 to transfer responsibility from MAFF to the Department of the Environment, a proposal which I am sorry to say has received no response from the Government:it seems that they are happy for the responsibility to remain with MAFF. I agree with hon. Members who have suggested that such matters belong under the aegis of the Department of the Environment. Perhaps the Government will have second thoughts about some of the Committee's proposals—I hope so.

Mr. Robert B. Jones: We all have our theories: mine is that MAFF is still obsessed with the idea that coastal defence is all about protecting farmland. That is not so, but that idea pervades the whole system. It emerged during the inquiry that every chairman of a regional front defence committee was a farmer, and the same applies to the land drainage committees. Of course, that may change over a period, and more environmentalists are becoming involved; nevertheless, I feel that the philosophy of MAFF is at fault.

Mr. Thompson: I hope that the hon. Gentleman and his Committee will continue to pursue that aspect of the problem.
The basic theme of the Select Committee recommendations is the need for a co-ordinated response to the difficulties involved in coastal protection. The hon. Member for Blackpool, South (Mr. Hawkins) represents a seat in the north, while mine is in the north-east; unlike Blackpool, my constituency is a village containing about 8,000 people; nevertheless, our problems are similar. The problems of coastal protection require a comprehensive view and full co-operation, which should extend beyond the boundaries of England and Wales. Any consideration of my county of Northumberland will relate to Scotland. Although a different attitude may be taken there, the two areas affect each other.
I compliment the Select Committee on its report, and I hope that the Government will take note of its contents.

Mr. Iain Sproat: I wish to direct my remarks to only one aspect of the Committee's excellent report. I shall take my text from the Government's response in the introduction to paragraph 1:
The Government is firmly committed to the effective protection and planning of our coast".


I have no doubt that the Government are doing effective work in many areas, but in one part of my constituency they are certainly not acting effectively. This is not a criticism of the present Government in particular: for many years, Governments have not acted effectively in helping to protect this particular piece of coast.
The piece of coast to which I refer goes round a piece of land known as the Naze—a word related etymologically to the word "nose", because the Naze sticks out into the North sea. It is a beautiful open space, comprising some 150 acres, and its centrality to local life is proven by the fact that the beautiful and picturesque little town next door to it is called Walton on the Naze; yet the Naze is being steadily destroyed.
In his excellent speech, the hon. Member for Wansbeck (Mr. Thompson) described how, at the end of the second world war, he had seen army lorries standing at a point that is now far out to sea. I can tell the hon. Gentleman that, at the time when he was watching those lorries, there were block houses in the Naze, about 50 yards from the edge of the cliff. Now, those block houses are so far out to sea—because the cliff has collapsed—that it is impossible to see them: the waves wash over them.
A beautiful open space is being eroded at a rate of some 6 ft a year—or so it is said, and I am sure that as an average that is correct. Cliffs do not crumble in a regular line, however, and huge chunks of the Naze will fall into the sea. In a single night, a patch of land about as big as the space between the civil servants' Box and the Gangway will go down. A wonderful recreational area for local people, measuring some 150 acres, is being steadily destroyed.
In another excellent speech, my hon. Friend the Member for Blackpool, South (Mr. Hawkins) rightly said that the first duty of Departments involved in such matters is to protect lives and property. At present, not much property on the Naze is threatened, but we should not only consider property; we should also think of the concept of heritage coasts and amenity value. That does not apply only to local people, for the Naze provides a tremendous tourist attraction. My constituency has a high unemployment rate: it is over 12 per cent. in Harwich and ever 14 per cent. in Clacton, and Walton on the Naze is between the two. The constituency has the highest unemployment percentage in the south of England. Tourism is one way in which we can help to mop up that serious unemployment rate: about 100,000 people visit the Naze every year.
Unfortunately, year after year, the Naze has been allowed to crumble away, because the local authority has not enough money to deal with the problem. My right hon. Friend the Minister of Agriculture, Fisheries and Food kindly received a delegation the other day, but ultimately no money was forthcoming. Meanwhile, a beautiful piece of old England is being eroded, and in 50 or 100 years nothing will be left.
The House may say, "Why? Here is a lovely bit of old England, central to local life and providing a wonderful amenity for locals and tourists". Indeed, a listed building stands on it—the Naze tower, built in 1720. In not many years' time, that tower will have crumbled into the sea unless something is done.
In the past, Departments have given as their main reason for doing nothing the fact that houses are not immediately threatened; but if the Naze—hon. Members should picture it as a chunk, or nose, sticking out into the North sea—disappears, the sea will sweep in and not only

curl around and start attacking Walton on the Naze from the back, but wash away places such as Kirby le Soken, just a few miles up the coast. As my hon. Friend the Member for Blackpool, South said, a stitch in time saves nine: that may be a cliche, but it is a truism because it is true.
It is extremely irritating—indeed, infuriating—for people who live in the area to learn that one of the reasons why the Government have not provided money to save this chunk of my constituency is the fact that some fossils have been found under it. They are very interesting, as they are about 50 million years old, but the problem is that, the more the sea washes away the Naze, the more fossils will become available for people who are interested in them. It is ludicrous for the care of fossils to be put above the care of local residents. I see a sympathetic frown of amazement across the face of the hon. Member for Islington, South and Finsbury (Mr. Smith), but I asure him that that is so. That is what is so infuriating.
Hon. Members have already mentioned the nightmare of the bureaucratic jungle—the Department of the Environment, MAFF, the National Rivers Authority and English Heritage. Hardly a body exists which does not seem to have some interest in this matter, and all to the detriment of my constituents.

Mr. Barry Field: My hon. Friend might like to know that he has a comrade in arms, because in Whitecliffe bay, English Nature prevented a caravan park owner from erecting sea defences, at his own cost, because the sea was exposing a variety of fossils that were exceptional in northern Europe. I wondered whether the Isle of Wight will have to wash away in the cause of fossils.

Mr. Sproat: My hon. Friend makes a good point; it is absurd. However, when one tries to pin down that absurdity and to say that such an argument cannot stand in the way of our constituents, one cannot find the right people to talk to. No one group will take up and weigh all the arguments and say, "The interests of the people who live there must come first." I say to my hon. Friend the Minister that the interests of my constituents and their children are not being considered as they should be. The Government should provide funds to save this beautiful bit of England and the local amenities and to help the tourism industry rather than interesting but hardly prime objects of importance like fossils.

Mr. Andrew F. Bennett: It is interesting to follow the hon. Member for Harwich (Mr. Sproat), who began by firmly praising the report. I wonder how far he read the section on managed retreat. There is a lot of evidence to show that, even where people can persuade the Ministry of Agriculture, Fisheries and Food or other bodies to fund the construction of sea defences, such defences are not always successful. I suspect that a considerable sum has been spent on unsuccessful sea defences. Some schemes that have been proposed to defend the coastline have resulted not only in it being attacked further along but have proved to do more damage that good. Although I fully understand the hon. Gentleman's concern for his constituents, a massive sea defence scheme will not necessarily solve the problem.
I was not a member of the Environment Select Committee in the last Parliament. I am pleased to be a


member now, and its members, certainly Sir Hugh Rossi, can be praised for producing a series of environmental reports on the green side of the Department of the Environment that did much to inform the House and attracted praise from people outside. It seems a paradox that, between 1983 and the dissolution of the last Parliament, the Select Committee never investigated council funding, the poll tax, housing and homeless people.
All those who believe that the establishment of Select Committees was one of the best things that the House did must strike a balance between the need for Select Committees to mirror Departments and to investigate the topics of the day. When the Select Committees were set up, there were Committees for trade, for industry and for energy, but they have now been combined into one. It is perhaps ironic that the Select Committee on the Environment is now engaged in a major inquiry into energy. I wonder whether the House is best served by having one Select Committee for the Department of the Environment, which covers a large area and inevitably means that the Committee must be selective about what parts of the Department to scrutinise. Perhaps Select Committees should more accurately reflect the scope of Departments and the need for scrutiny of them.
I welcome the Select Committee's report and the debate. There has been a tendency to use Supply days to debate Select Committee reports, in which members of the Select Committee, the Minister and the Opposition spokesman tell each other what a great report they have produced. That does not inform our proceedings or other hon. Members. Interestingly, perhaps because it is a new Parliament, we have heard tonight from more hon. Members who did not serve on the Committee but who have read the report. If Committee reports inform the House rather than allowing Committee members to congratulate themselves, I shall welcome it.
I am disappointed that the Government did not accept the recommendation of the Committee to set up administrative bodies that respond to the natural cells of coastal activity. The Committee persuasively suggested that bits of the coast should be considered not in isolation but rather as part of a network. I was slightly disappointed on asking a geomorphogenist whom I know well, "Can I find a map of the British isles that sets out cell patterns?" to discover that, although some of the patterns are fairly well documented, others are nothing like as well documented and understood, and there is a fair amount of argument about how far the systems are closed or open.
I accept that there may be a little difficulty in working out where the cell boundaries would be, but I have always argued that it is important that administrative boundaries reflect the physical realities, because artificial boundaries cannot be imposed. It is important that natural cells are recognised and reflected in boundaries.
It is important that more work is done on the cost-benefit analysis of environmental works along the coast. Too often, the environmental benefit analysis is conducted by the engineers who are proposing schemes. Like statistics, cost-benefit analysis can be made to prove what is wanted. It is important, therefore, that such schemes are scrutinised by people from different backgrounds who can test them.
As the hon. Member for Hertfordshire, West (Mr. Jones) said, MAFF, which is responsible for coastal works, still seems to be driven by farmers who were brought up to try to expand the amount of productive land. It would be much more logical if responsibility were handed from MAFF to the Department of the Environment, which might take more of an overview of the situation. Before any work is done, there is at least supposed to be consultation between MAFF and English Nature to consider the scientific evidence on the impact of the environment. If English Nature puts up a case that a particular scheme is not in the best interests of the natural environment, the scheme does not go ahead.
As I understand it, if any county engineer or other person responsible for putting up a scheme says that it has to be carried out as emergency work, this consultation does not have to take place. I accept that, if there is a problem such as that which occurred in north Wales, at Towyn, where emergency means that something has to be done in the next five minutes or the next hour or two, consultation just cannot take place. But local groups often take the view that the emergency is not something that has to be dealt with within the next five minutes, the next day, or the next couple of days, that it can be dealt with on a much longer time scale.
I would like the Minister to address a particular problem that has been drawn to my attention—what happened in the destruction of the SSSI at the Milford marine band at Milford-on-Sea in Hampshire. I understand that the work was done there on the basis that it was an emergency and there was no need for the engineers to consult English Nature. I do not expect the Minister to get the details now: it would be remarkable if his civil servants could come up with the details of that site at this stage.
Of course, if I hear his answer when he winds up, I shall be delighted, but I am very happy to wait, and receive a letter from the Minister telling me exactly why the work had to be carried out on an emergency basis on that site; why there was such a short time scale that it was not possible for any discussion to be held between the county and English Nature on what work was to be carried out; and why it was that the SSSI was destroyed as a result of carrying out the work. The destruction was not, I gather, the result of the work carried out on the beach but occurred in putting in an access road for the contractor to get down to the beach.
That is an amazing state of affairs, and I would like the Minister to look into the question whether the consultation procedure between MAFF, the local authority and English Nature could be improved, so that, unless the emergency is a matter of hours away, consultation can take place.
I also understand that there is often argument as to whether a grant should be paid, and that normally, when it can be shown that it is an emergency, the grant is paid. Of course, one of the best things about dealing with an emergency is that it is very difficult for anyone to come along afterwards and look at what was there before. If it is not treated as an emergency, that is not the case.
My next point concerns the question of how far there is good co-operation between the Department of Energy, MAFF and the Department of the Environment, or, in some specific cases, the Welsh Office. Greenpeace has been expressing to me considerable concern about the last


round of oil and gas exploration licensing. It is particularly concerned about blocks 107/1 and 107/6, close to Bardsey Island and the Lleyn peninsula in north Wales.
There are questions about how far we should be searching in Britain for every spot where there may be oil and gas, how much we want to exploit and how much of the locked-up carbon in the earth should be released into the atmosphere. I certainly think that, unless the Government are committed to trying to release every last bit of oil or gas from the earth into the atmosphere, they ought to question whether sites so close to ones which are particularly important for sea birds and sea creatures ought to be exploited.
I wonder whether the Minister can tell us what consultation there was over the granting of licences by the Department of Energy for oil and gas exploration close to Bardsey Island and the Lleyn peninsula, and how far they looked at the implications for kittiwakes, guillemots, razorbills and other sea birds, and such things as the grey seal off that coast.
The Department of Energy, or the energy section within the Department of Trade, is encouraging the oil companies to decide which blocks they want to bid for again, and quite a lot of seismic studies are going on around the coastal waters with regard to possible bids for future blocks. I wonder how carefully the Government have been looking at the implications of oil and natural gas exploration in terms of a strategy for protecting the marine environment around our coasts.
Finally, I must stress my disappointment that there has not been more of a response by the Government to the need for a national strategy for our coastal waters. I have frequently put down questions to Ministers asking if they will list all the estuaries around the coast of England and Wales which have received any Government money to consider the feasibility of, for example, barrages to improve transport, barrages to be concerned with either power generation or power storage, or barrages for other purposes. There seems to be great difficulty in getting from the Government lists of estuaries where Government money is being spent on considering schemes.
I can understand the argument that we might want a water power scheme on one of the estuaries around the British Isles, but there ought to be a deliberate Government strategy. There ought to be some attempt to draw up priorities. It would be very unfortunate if there were not some balance between the loss of natural habitat within our estuaries and schemes which might have commercial advantage.
Will the Minister, either in this debate or in some other way, inform the House how much Government money is going into schemes. There are discussions about the Severn, the Mersey and the Dee, and I believe that schemes are being considered for the Humber, but I would like to see from the Government a comprehensive list of schemes being undertaken, how much money is being spent on that sort of inquiry and what the results are.
This is certainly a very useful report. I listened with considerable interest to the Minister's explanation of why he could not implement all the recommendations. I look forward to the opportunity of seeing the Minister before the Committee in the not too distant future so that the Committee can itself pursue some of the questions which have been left unanswered.

Mr. Michael Stephen: I welcome the opportunity to contribute to this important debate as I too have the honour to represent a coastal constituency. Although the name of the constituency is Shoreham, it includes not only the town and port of Shoreham, but also a long stretch of the channel coast from Hove to Littlehampton, with the exclusion of Worthing borough.
I welcome the Government's co-ordinated approach to the problem of coastal defence, but I believe that we need a much more co-ordinated approach to the management and planning of the coastal zone, not only the natural environment, but also the environment where people live, work and enjoy their leisure hours. Leisure is particularly important. On the Sussex coast at the present time we have a high level of unemployment, and tourism is vital to the economic recovery of our area.
Here I pay tribute to an organisation which has already been mentioned in the debate—SCOPAC, the Standing Conference on Problems Associated with the Coastline, which is a consortium of local authorities covering the area from Worthing to Weymouth. I believe that it is the first such organisation to be created at member level; there are other organisations at officer level, but this is still the only one at member level. Its current chairman, Councillor David Birt, is chairman of the Arun district council and is one of my constituents.
The organisation has many achievements to its credit. I shall mention just two. First, it has done some very important research into the transport of sediment. The tides in the English channel are ferocious and large quantities of sand and gravel are transported long distances. In Shoreham the port which used to exist in Elizabethan times is now nearly a mile from the sea. Secondly, SCOPAC has done a great deal of valuable work in producing a model format for coastal management plans for use by local authorities. Regrettably, however, SCOPAC is supported only by local authority funds. It has no formal recognition from Government and is not eligible for Government grants.
Paragraph 20 of the Government's response to the Select Committee report states that the Government believe that the appropriate level for management planning is at the estuary level or along relatively short stretches of open coast. I doubt whether that approach is right and, in view of the excellent work done by SCOPAC, will the Minister reconsider the Government's position on this issue? Also, like many other hon. Members, I ask the Minister to examine carefully the co-ordination of Government Departments' work on coastal zones and perhaps to reduce the number of Departments with a finger in the pie.
As for sea defences, I agree with the comments of my hon. Friend the Member for Blackpool, South (Mr. Hawkins). We have the same problem on the channel coast, especially in my constituency at Shoreham and Lancing. We must always be on our guard because the power of the sea is truly awesome and large sums of money must be spent to defend the land against it.
I pay tribute to the work that the Government are already doing in my area. In the early 1980s, the Southern water authority spent about £500,000 on new groynes along 6 km of the foreshore of Shoreham beach, and since the formation of the National Rivers Authority in 1989, a further £741,000 has been invested in capital works, with


£124,000 being spent on works at Lancing in this financial year. A further £160,700 has been allowed in this year's maintenance commitment for that particular frontage.
I wish to draw the attention of the House to a small point but one which is important to the people involved. Under the Coast Protection Act 1949, local authorities may carry out coastal protection work, but I agree with other hon. Members who believe that there is far too much statutory consultation involved. I sometimes think that, after all the time and money spent on consultation, it is surprising that there is time or money left to do any work. Perhaps the Minister will bear that point in mind.
In some areas where coastal protection work must be carried out, it will be found that fishermen are working there with fixed gear such as lobster pots. Although the council has statutory power of entry into such sea areas to carry out works and also to pay compensation, it can pay compensation only if it is satisfied by evidence—usually audited accounts—that financial loss has been suffered by the fishermen.
It may or may not surprise the House to learn that some fishermen are unable or unwilling to produce audited accounts for that purpose. Some feel that unless a firm commitment is made to pay them compensation they are entitled to obstruct the execution of the work. Indeed, some even think that the Ministry of Agriculture, Fisheries and Food will assist them to do so. A licence must be issued by the Ministry of Agriculture, Fisheries and Food under part II of the Food and Environment Protection Act 1985, but such licences contain no reference to compensation. Could the parties involved have clearer guidance on the circumstances in which compensation will be paid and the eligibility for central Government funding of that compensation?
In conclusion, I am very grateful for the work of the Select Committee on the Environment and to my hon. Friend the Member for Hertfordshire, West (Mr. Jones), its Chairman, for his clear and concise introduction to this debate.

Mr. Chris Smith: The starting point for the debate must of course be a recognition of the fundamental importance of our coastline and marine environment which provides a unique landscape and habitat, an area of recreational value and a place in which people live and work. It is worth remembering that the potential threats to that marine and coastal environment are considerable.
A survey conducted in April this year by the Royal Society for the Protection of Birds covering 126 estuaries around the United Kingdom coast found that there had been substantial changes since its equivalent survey in 1988. A total of 57 estuaries now face the threat of permanent damage compared with only 43 four years ago. The survey highlights the potential dangers to our marine environment.
The Select Committee on the Environment did an excellent job in examining the important and threatened areas of our coastline. I am glad to take the opportunity to join other hon. Members in paying tribute to that Committee and to its former Chairman, under whose chairmanship I and the hon. Member for Hertfordshire,

West (Mr. Jones) served for several happy years, and to welcome the hon. Gentleman to his important task in chairing it now.
The Select Committee report contains a series of well considered, well worked out and important recommendations. In particular, the report identified the problem of incoherence in the way in which we look after and plan for our coastal zones. One and a half pages of the report consist of a list of various structures, agencies, organisations and levels of governmental, nongovernmental and local authority interest in the business of protecting our coastal zones. So long as there is such a densely complex system of protection, the protection itself will be inadequate. That is the central message of the Committee's report, which it was absolutely right to identify.
Although encouraging in some respects, the Government's response has been inadequate. The Government are right to identify, for example, the need for environmental impact assessment in some aspects of coastal protection work. I shall deal with that issue in a moment because the Government do not go far enough. They are also right to note that some aspects of port activities will need to be brought into line with the European Community habitats directive and to recognise in some areas of coastline defence the importance of a strategy of managed or controlled retreat. Although some areas will require physical protection—a number have been identified today—there are other areas of our coastline where retreat is perhaps a better option.
Many aspects of the Government's response to the Select Committee report are disappointing. I shall draw the House's attention to some of them. First, the Government fail to recognise the great importance of examining the whole coastal resource and the need to protect all of it, not first designated or especially important areas within it. For example, paragraph 15 of the Government's response reveals a danger of the Government establishing the principle of only partial coverage of the coastline in the preparation of management plans. If we have a strategy which looks only at portions of the coastline and not at the coastline as a whole—a point which was touched on by the hon. Member for Cornwall, North (Mr. Tyler)—if that is the Government's strategy, there is a danger that pressure will move from designated areas of the coastline to other areas which have not been designated.
Secondly, there is undoubtedly a need for greater coherence in the Government's approach to coastal planning and protection. Witness after witness in the Select Committee emphasised the need for a common strategic approach to planning in the coastal zones, and if there are to be joint arrangements between different agencies and local authorities those arrangements must have a clear and coherent strategic aim.
The Royal Town Planning Institute, in its comments on the Government's response to the Select Committee, puts the ball very firmly in the Government's court. It says:
The response to rationalising the activities of Government Departments and agencies"—
from the Government—
is almost wholly negative.
Referring to the Government, the institute say:
It points at more than one part of its response to the number of bodies dealing with similar activities, particularly pollution, research, coastal flooding and protection. As it expects local government to do, so should central government


look critically at the cost-effectiveness of a number of bodies with similar duties and also consider the effects of a sectoral approach on those for whom the services are intended.
The RTPI seems to me to have hit the nail on the head and there is a need for the Government to be more active in looking at the plethora of Government Departments, bodies and organisations with some degree of interest at present in protection of the coastline and to bring about a greater rationalisation. The very concept of coastal zone management as an integrated approach, a concept that sits at the heart of the Select Committee report, is one which I do not believe that the Government have taken on board—and they should.
Thirdly, the Government need to improve their approach to environmental impact assessment for coastal development. Their response goes some way towards addressing that in relation to coastal protection works, but they do not insist on environmental impact assessments for a whole range of other coastal development matters-and they should.
The Council for the Protection of Rural England, for example, proposed that environmental impact assessments should be required for, among other things, offshore oil and gas investigation work, marine dredging, coastal protection works, port and harbour activities currently falling within the scope of permitted development, renewable energy developments, large-scale tourist developments, camping and caravan sites, and fishing operations. Those are valid proposals and the Government should be looking much more attentively at them than they are.
Fourthly, the Government do not do very much to overcome the division which exists in the planning system at present: the division of responsibility between the area onshore and the area offshore. The Select Committee recognised the importance, in habitat terms, of regarding the shore and the sea which adjoins the shore as being a whole in planning terms. The Select Committee's proposal that local planning authorities should be given planning powers which run out into the marine environment and do not just stop at the low water mark is a sensible proposal to which the Government should be giving a more positive response. The ecosystem does not end at the low water mark and the Government should accept that.
Fifthly, the Government have not given a constructive response to the proposal that national policy formulation needs to be much clearer.
Many speakers from both sides of the House have said to the Government that there is a need for a coastal unit to be established within the Department of the Environment and perhaps in due course brought into the environmental protection agency to ensure that we look at the needs of our coastal zone as a whole around the country and in a coherent way. It is vitally important that the Government take on board this proposal from the Select Committee and establish a national policy unit which can provide the sort of strategic overview on a national basis that we desperately need.
Sixthly, the Government are being far too slow in the establishment and designation of marine nature reserves. I appreciate that they are embarking on the marine conservation area approach as an interim exercise, but it is important that they speed up the process of designating marine nature reserves. Had they done so, some of the

difficulties in Cardigan Bay that my hon. Friend the Member for Denton and Reddish (Mr. Bennett) addressed might have been avoided.
Seventhly, the Government have made some progress on the issue of aggregate and mineral working, but not enough. My hon. Friend the Member for Gower (Mr. Wardell) spoke trenchantly of the difficulties facing parts of his constituency as a result of mineral dredging. The Government need to take this problem more seriously than they have up to now. Moreover, alongside the problem of dredging, they also need to start addressing in a coherent way the problem of super-quarries which is beginning to emerge especially in parts of Scotland. We look forward to better and more stringent guidelines being proposed by the Government and I hope that they will get on with the process quickly.
Eighthly, the Government have rejected the Select Committee proposal in paragraph 109 that pollution control should be brought under the aegis of a single agency, and that if and when the environmental protection agency becomes established that appears to be the obvious place in which to locate pollution control for areas of coastline. Unbelievably, however, the Government say in their response that
there is no justification for a single agency".
The whole emphasis of the Select Committee report is that there is indeed justification for a single agency, and it is about time that the Government recognised that.
Ninthly, this debate has been characterised by a remarkable degree of gentle and constructive criticism of the Government from both sides of the House. A number of hon. Members from both sides have put the argument that responsibility for coastal defences should be taken away from the Ministry of Agriculture, Fisheries and Food. That is long overdue. If the Department of the Environment had the courage to stand up for its own corner and say that it should be responsible, it would have the full support of the Opposition in so doing. We should be happy to join in transferring those responsibilities to a far more logical place than that at which they now rest.
The report also addresses the issue of the Crown Estate Commissioners and the absurdity, which even the Commissioners accept, of their status as both landlord and planning authority. The Commissioners are placed in an invidious position by their dual status, and it is time that their planning and licence-giving functions were transferred, as the Select Committee proposes. The Government, however, want to adopt an evolutionary approach. The trouble with evolutionary approaches is that they tend not to lead anywhere. It is incumbent on the Government to take a lead and to relieve the Crown Estate Commissioners of their planning functions.
The Government's response to the Select Committee reveals little sense of the long-term issues involving the possibilities of climate change, global warming and rising sea levels. They talk about some temporary changes, but they do not seem to take on board the possibility that we may face longer-term phenomena. That speaks volumes about the Government's lack of proper strategic vision. It is clear from the report what the Select Committee believes, which is also what hon. Members on both sides of the House have said in the debate—that the key necessity is a proper strategic method of dealing with the needs of the coastal zone. The Government have got some bits and pieces of the approach right, but I fear that they still have


a long way to go. There is too little strategy and coherence in their approach. They need to think again, and I seriously urge them to do so.

The Minister for the Environment and Countryside (Mr. David Maclean): Like the hon. Member for Islington, South and Finsbury (Mr. Smith), I am grateful to the Select Committee on the Environment and its new Chairman, my hon. Friend the Member for Hertfordshire, West (Mr. Jones), whom I warmly congratulate on his election to his post, for ensuring that the House has this opportunity to debate coastal zone protection and planning. I pay tribute, too, to my hon. Friend's illustrious predecessor, Sir Hugh Rossi, for his excellent chairmanship of the Select Committee.
The Select Committee worked in the last Session to a tight timetable to cover what is a very complext subject, and the report which they produced was a valuable contribution to coastal policy. It was especially effective for its exhortation to all of us across Government to look at the whole picture on the coast, and not just particular sectoral concerns.
The Committee's report was wide-ranging, covering the overall framework for coastal zone planning and management, development control, coastal defence, nature conservation, pollution and fishing and the links between all of these. The debate today has been similarly wide-ranging. I confess that I did not come fully briefed for the discussion on old fossils—who are not present in the Chamber.
The Select Committee called for a national coastal strategy. The Government's response made it clear that, although we do not believe in a single all-embracing strategy for the coast—or, as my hon. Friend described it, a "cascade" of national, regional and local plans—we believe in clear statements of national policy which together add up to a coherent whole.
Recent examples of such statements include policy on heritage coasts, and planning policy guidance providing a clear policy steer for development on the landward side of the coastal zone. That PPG—PPG20—makes it clear that development on the coast should be limited to that which genuinely needs to be located there, and guided towards areas that are already largely developed. The undeveloped coast should remain so, largely protected by conservation designations because of its high landscape and nature conservation value. The PPG discourages new development in coastal areas at risk from flooding, erosion and landslip, and it encourages close co-operation between local authorities and interested groups in developing plans for stretches of coast, especially estuaries.
Guidance has already been issued on the response to sea level rise, and in December 1991 my right hon. Friend the Minister of Agriculture, Fisheries and Food announced his intention to develop a national flood and coastal defence strategy to provide a comprehensive policy framework which fully reflects environmental concerns. I welcome that, and work on it is now well under way.
Other initiatives include major investment to improve coastal water quality; preparation for implementation of the EC habitats directives; a review of regulation below low water mark; and support for multi-agency estuary and

coastal management plans. I assure the House that the review will be extensive and will cover the entire United Kingdom—Northern Ireland, Scotland and Wales, as well as England. We believe that those initiatives provide a sensible and coherent programme of action to address coastal issues.
Our strategy has three basic strands. First, we need effective statutory protection for our most valuable coastal landscapes and marine and coastal habitats—often of international importance. Much of the coast is already designated and so protected from development through the planning system. We are building on that through designating special protection areas for birds and implementing the habitats directive. I reject any allegation that we are doing that slowly, or have a poor record. We are not slow, and we have a good record.
Secondly, we need effective planning and management structures for coastal land, estuaries and inshore waters, not just for designated areas, but also for undesignated areas which nevertheless form part of our national coastal heritage. Active management is particularly important where there are many potentially conflicting uses, or where an area is of substantial recreational or natural value.
Thirdly, we need a broader strategy for the health of the marine environment, which cannot be confined to any rigid site-based approach but which looks instead at broader issues such as pollution control, fisheries management and species protection.
For the second strand—planning and management of the coast and of estuaries—our framework differs from that proposed by the Committee. The Committee, like many hon. Members who have spoken tonight, wants regional strategies. We want to make sure that management is at the appropriate level for the problem being addressed. That is not to say that we do not believe in a regional perspective here, but that can usefully be provided in the context of regional planning guidance and by regional studies of key issues such as sport and recreation. The coastal recreation strategy by the Southern Council for Sport and Recreation is a good example. But it is at the local level that conflicts between coastal users must be resolved.
Regional coastal cells provide a useful basis for looking strategically at coastal defence against erosion and flooding. That is why my colleagues in MAFF welcomed the development of regional groups of coastal protection authorities and the National Rivers Authority, and are encouraging them to develop coastal defence strategies for their areas.
However, we believe other issues—such as recreational management, nature conservation and interaction, for instance, with fishing and ports operations—are best managed more locally, for instance, around an estuary or along a heritage coast. That means that planning and management is local enough to allow effective consultation with interested groups, and discussion of practical issues. Local authorities can co-operate around an estuary to ensure consistent development plans, and a management approach that considers the estuary as a single ecological system and takes both land and water into account.
That is our approach, and I commend it to the House. When we issued our response, English Nature said:
We are pleased by the commitment to support the existing informal coastal groups … and we believe that it is vital that the Government strongly encourages them to prepare coastal defence strategies for each cell … Other types


of activity, for example recreational use and many types of development, are better co-ordinated at a more local scale. We are committed to developing such plans and are currently involved in preparing pilot plans for 13 English estuaries.
Our commitment to sustainable management of our coasts is well established, and I believe that the framework that we have adopted provides a firm foundation for further progress.
My hon. Friend the Member for Hertfordshire, West, my hon. Friend the Member for Shoreham (Mr. Stephen) and, indeed, the Select Committee argue that, to show their commitment to the coast, the Government should reorganise their bureaucracy and have a single coastal zone unit. We accept the need for a national overview of coastal issues. We have already gone a considerable way down the road to achieving this, with a standing interdepartmental group on coastal policy, which has now been established for well over a year. It has proved a valuable mechanism for discussion. It co-ordinated the Government's response to the Select Committee, and it is now taking forward work reviewing regulation and management below low water mark. The secretariat for this group is in my Department.
It would be a mistake to go beyond this and to argue for a group or unit to take on substantial executive functions. It would not make sense in a complex, heavily populated country such as ours to have a Department for the coast. In many sectors—land use planning, pollution, flood defence and nature conservation—coastal issues are only one aspect of much larger issues. Management of the coast needs to be integrated with management of the rest of the land and of the sea. The coast is not a separate thing that can be hived off to one corner.
My hon. Friend the Member for Hertfordshire, West, in his excellent introduction of the report, and other hon. Members, including the hon. Member for Islington, South and Finsbury (Mr. Smith), suggested that responsibility for coastal defence, and the management of coastal flooding and erosion, should be transferred from the Ministry of Agriculture to the Department of the Environment. We rejected that recommendation.
The reason was simple. The Government do not accept that the present allocation of ministerial responsibilities results in any lessening of our commitment to take full account of environmental concerns in coastal defence policy. Environmental considerations are an integral part of decision-making on flood and coastal defence, as they are in other areas.
My hon. Friend the Member for Blackpool, South (Mr. Hawkins) was worried about Blackpool's sea defences. I know that overall expenditure by the Ministry of Agriculture on flood defences has increased dramatically in recent years. However, the demand is practically unlimited. I will draw my hon. Friend's concerns in Blackpool to the attention of my right hon. Friend.
I reject any charges of unnecessarily complicated bureaucracy. All the key players involved in flood defence, whether the Department of the Environment, Ministry of Agriculture, Fisheries and Food or local councils, know how the system works. I do not believe that there is unnecessary bureaucracy. I do not want flood defence to be transferred to my command. I see no point in that, and I do not especially want it to happen.
It would not make any particular difference. Shuffling name plates on ministerial doors or putting policy into another Department does not remove the need for essential consultation with all the relevant key players.

Mr. Tyler: Will the Minister give way?

Mr. Maclean: No. I want to crack on. I have many points to answer, but I will give way at the end if there is time.
My hon. Friend the Member for Hertfordshire, West said that the Ministry of Agriculture, Fisheries and Food's policy on coastal defence was too farmer-orientated. I am sorry to disagree with my hon. Friend, but I must point out that 85 per cent. of Ministry of Agriculture, Fisheries and Food funding goes to defences in urban areas, and rightly so. The announcement on coastal policy by my right hon. Friend on 2 December is conclusive proof that the Ministry of Agriculture, Fisheries and Food is working with natural coastal processes and is ready to consider managed retreat in rural coastal areas.
I point out to the hon. Member for Wansbeck (Mr. Thompson) that we need to work with nature rather than against it when designing coastal defences—a point also made by the hon. Member for Denton and Reddish (Mr. Bennett). The Ministry of Agriculture, Fisheries and Food is encouraging authorities to adopt soft engineering solutions which are more in sympathy with natural processes. There is a clear presumption against disturbing natural coastal processes unless life or important natural or man-made assets are at risk.
In addition, coastal defence authorities are now expected to consider the potential for managed retreat when assessing options for coastal defences in rural areas. The Ministry of Agriculture, Fisheries and Food intends to continue to work with English Nature and other interested organisations to explore the many practical questions of how this technique can be deployed to maintain and restore coastal habitat.
My hon. Friend the Member for Hertfordshire, West asked about action at European level. The European Commission has not yet published any proposals for a Community strategy for integrated coastal zone management. However, we are devoting considerable effort across Government to implementation of the European Community habitats directive. The Government were in the lead in supporting the adoption of the directive, under which we are committed to species protection and to ensuring designation and effective protection for land and marine sites of Community importance.
The hon. Member for Gower (Mr. Wardell) asked us to review the role of the Crown Estates Commissioners in controlling development generally, and not just marine aggregates dredging. As explained in the Government's response, the Crown Estates Commissioners' regulatory role over development is pretty limited: it is confined to marine aggregates and marine fish farming. The Commissioners' role in both areas is subject to considerable scrutiny. We believe that the best way in which to conduct a more general review is to look comprehensively at existing systems of development control and not only at the small element for which the Commissioners have responsibility.
My hon. Friend the Member for Isle of Wight (Mr. Field) gave us a wonderful dissertation on underwater archaeology. He and other speakers have argued that the


solution to coastal zone management is to extend the existing land use planning systems and other control systems out to sea. As hon. Members are aware, the Government have undertaken to address the issue in their review of regulation below the low water mark. We are currently working to prepare a discussion paper.
We shall need to look at the existing systems for controlling development below the low water mark and to consider whether there are limitations in those systems which need to be remedied. We shall also need to look at questions such as the balance of advantage for different types of offshore development between decision-making at national and local level and the need for cost-effective involvement of environmental expertise. We must also consider the need for effective local and public involvement, which is terribly important.
My hon. Friend the Member for Isle of Wight asked about the dumping of dredged material and about the environmental appraisal of such dumping. That issue is under review as part of the Government's review of regulation below the low water mark. I hope that that satisfies my hon. Friend.
My hon. Friend the Member for Harwich (Mr. Sproat) made an elegant plea for us to save the Naze. I regret that so far it has not been possible to find a solution which has resulted in its complete protection. I know that my hon. Friend has pressed the case on behalf of his constituents at the highest levels, and I shall draw his comments tonight to the attention of my right hon. Friend the Minister of Agriculture, who has never been, and could never be, described as an old fossil.
The hon. Member for Denton and Reddish was concerned about oil exploration, among other issues. The ones to which I have an immediate answer concern oil exploration. I shall write to him on the other couple of issues he raised. I can tell him that the Department of the Environment was consulted on the blocks recently offered for oil and gas licensing. The Government's adviser, the Joint Nature Conservation Committee, also gave advice on the implications for sea-birds.
Government policy is to attach special conditions to exploration in sensitive areas to protect the needs of environmental interests, including a ban on drilling during seasons when seabirds may be affected. I shall scan the report of the debate carefully. My hon. Friend the Member for Shoreham raised points about compensation, and I shall write to him about them.
I emphasise that the Government's response to the Select Committee report set out a substantial work programme for the better protection and planning of the coast. I shall not repeat that programme; I shall say merely that further opportunity for public debate on coastal issues will come when we publish our promised discussion paper—or papers—on regulation below the low water mark.
I believe that, in our response and our policy, we have a clear framework for action. We have clear commitments to action. We are committed to ensuring that the principle of sustainable development is applied to our coast. I commend our approach to the House.

Mr. Robert B. Jones: With leave of the House, I welcome the fact that so many hon. Members who are not members of the Select Committee have taken part in the debate. That speaks for itself, as does the degree of support that hon. Members of all parties have given to the conclusions that we reached.
I have served on the Select Committee on the Environment for nine years. During that time, our conclusions have been rubbished from time to time by the Central Electricity Generating Board, Ministers and others. However, our reports have stood the test of time; I can think of no central recommendation, including the recommendation for the creation of the environmental protection agency, which has not been accepted in the end. The fact that we are making progress a little more slowly than I want does not rule out the acceptance of our recommendations in the end.
I must correct my hon. Friend the Minister who, in an otherwise most interesting speech, implied that the Select Committee was in favour of a new Department of State to deal with coastal management. That is certainly not the case. Our aspiration was that that matter should be managed firmly and accountably within the Department of the Environment.
We have had an interesting and excellent debate. It is, I think, one of the most important features of parliamentary government that we hold debates on estimates and Select Committee reports, and I am grateful to have had the opportunity to initiate this one.
The debate was concluded, and the Question necessary to dispose of the proceedings was deferred, pursuant to paragraph (4) of Standing Order No. 52 (Consideration of estimates).

Banking Co-ordination

The Economic Secretary to the Treasury (Mr. Anthony Nelson): I beg to move,
That the draft Banking Coordination (Second Council Directive) Regulations 1992, which were laid before this House on 17th November, be approved.
The regulations, which give effect to the second banking directive and, in part, to the second consolidated supervision directive, represent a major new development in the framework for supervising banks in the Community and set the foundations for the single market in banking.
As the regulations implement a Community obligation, they are to be made under the powers provided by the European Communities Act 1972. That Act permits regulations to he made by negative resolution. However, on a matter of such importance—a matter which I know is of considerable interest to a number of hon. Members—it is clearly right to lay the regulations in draft and seek the approval of both Houses before making them.
The United Kingdom was in the forefront of those arguing for the adoption of the second banking directive, which offers opportunities for British banks and benefits for consumers throughout the Community. The financial services industry is, and always has been, one of the United Kingdom's key export earners, and the directive offers major opportunities for British banks and building societies that want to offer their services elsewhere in the Community. Rather than having to obtain separate authorisation from the authorities in each Community member state, banks will now be able to rely on their home state authorization—the so-called single passport—to conduct a wide range of banking and financial services, whether by establishing a branch in another member state or by providing cross-border services. The directive provides for the streamlining of supervision and the reduction of any barriers to entry that may exist in other member states.
Banks from other member states will also be able to operate in the United Kingdom on the basis of their home state authorisation. The success of United Kingdom financial centres has been won as a result of, rather than in spite of, the openness of our financial markets, so the principle that underlies the second banking directive—that of a market without barriers—goes entirely in the right direction.
The directive goes in the right direction for consumers, too. Banking is already, of course, an international market in many respects, but there may be scope for still more competition and diversity. The services and financial products that have been developed in one market may well catch the appetite of consumers in other parts of the Community. The aim of the second banking directive is to enhance the opportunities for banks to break into new markets, and if it succeeds in doing that, banks throughout the Community will be kept on their toes, which is clearly no bad thing.
It is important that increased competition should not be achieved at the expense of standards of regulation. That concern was at the forefront of the Government's mind when the second banking directive was being negotiated. That is why it is so important that underpinning the single passport regime is an extensive body of common standards on the prudential criteria for authorising and supervising

banks. Some of that is in the second banking directive itself, and some in the second consolidated supervision directive, which the regulations also implement.
Other important elements are the own funds and solvency ratio directives, which set detailed solvency rules for credit institutions and which have already been implemented in the United Kingdom. The process of refining common standards will be carried forward in two further—directives-one dealing with banks' large exposures, the other setting out capital adequacy rules to cover market risk, which are on the point of adoption in the EC.
The harmonisation of prudential rules is a key element of the answer to those who express the concern that, in the wake of the BCCI experience, it is unwise to proceed with a framework for banking supervision that places such weight on the performance of other countries' supervisors. Quite apart from the fact that the whole second directive framework is about setting common basic standards, however, it is important to consider the positive benefits that flow from achieving a clear basis for assigning supervisory responsibility for internationally active banks. The BCCI case has shown clearly the difficulties that supervisors face in dealing with a complex international conglomerate with an extensive branch network in one country and its head office in another. Assigning full supervisory responsibility to the authority in the bank's home state, with host supervisors in a co-operating but clearly subordinate role, is clearly a sensible way of tackling such situations.
The principle of home state supervision established by the second banking directive framework builds to a great extent on the framework that banking supervisors throughout the world have been developing over the years—mainly through the Basle forum—to deal with internationally active banks.

Mr. A. J. Beith: What if the home state chosen by the bank were Luxembourg, bearing in mind the fact that, at one stage in the BCCI episode, Luxembourg said that it would prefer it if the Bank of England took over responsibility?

Mr. Nelson: In practical terms, as I shall try to explain, much of the responsibility for supervision may be delegated to the host state bank. Indeed, important responsibilities will remain with the host state bank under the regulations. The right hon. Gentleman has put the key question. These extremely complex regulations enact two important directives and the question at the back of my mind is exactly the question that the right hon. Gentleman poses: will banks authorised in a country—in this case. a country within the European Community—whose supervisor may not subscribe to the highest standards, or may not have the resources to operate such standards, be able to operate here? If the right hon. Gentleman will allow me to make progress, I hope that he will obtain some reassurance from my remarks.
Within the Community, the second banking directive takes the Basle principles to a new point by requiring the principle of mutual recognition of standards to be enshrined in national law.
Thus, the Government remain of the view that the supervisory principles underlying the second banking directive remain valid in a post-BCCI world—indeed, that in many respects, they are part of the process of ensuring


that a bank could not in future develop as BCCI developed. That view is echoed in Sir Thomas Bingham's conclusions. Sir Thomas said that nothing in the history of BCCI called for the new Community regime to be substantially revised. Like Sir Thomas, however, we take the view that, within the framework, important issues of detail need to be looked at to ensure that all the lessons of the case are learnt.
Four of the issues that Sir Thomas covered in his recommendations are particularly relevant here. First, he emphasised the importance of the principle that a bank's head office—the location of its mind and management—should be in the same place as its registered office. A recital to the second banking directive makes it clear that member states should require that.
Secondly, Sir Thomas recommended that all supervisors should have powers to refuse authorisation, or to withdraw it once given, where banking groups are structured in such a way as to frustrate effective consolidated supervision.
I am pleased to say that both those potential changes in Community legislation were discussed in outline at the Economic and Finance Council on 23 November, and received a broad welcome both from the Commission and from other member states. The Commission has undertaken to bring forward specific proposals with all possible speed.
Thirdly, the Community needs to look again at the issue of supervisory confidentiality and, specifically, the exceptions to it—the so-called gateways—which enable supervisors to communicate as they need to with others engaged in regulating different aspects of the bank concerned, or with the banking and financial system more generally. Sir Thomas Bingham highlighted the issue of exchanges of information between Community supervisors and those in third countries, and I know that the Commission is keen to look at what can he done to facilitate co-operation and exchange of information in that regard.
Action is also in hand which will meet the last of Sir Thomas Bingham's recommendations on the EC framework, which was that there should be agreement as soon as possible on a Community directive on deposit protection, putting it on a home state basis, to parallel supervision.
The Government fully support that principle and a draft of such a directive is currently being discussed and considerable progress has been made under the United Kingdom presidency. The directive will introduce certain minimum requirements for deposit protection schemes and banks will have to make the protection afforded by their home state available to those who make deposits in their branches in any other member states.
I want now to explain in more detail how the broad principles of the directive have been transposed into United Kingdom law by the regulations that we are debating.
The regulations divide broadly into two main parts—the inward and the outward passports. Taking the inward passport first, the approach of the regulations is to ensure that the authorisation requirements under the Banking Act 1987, the Financial Services Act 1986, the Consumer Credit Act 1974, and the Insurance Companies

Act 1982 do not bite on incoming EC institutions in respect of the activities listed in the second banking directive which they are entitled to conduct by virtue of their home state passport.
The regulations set out the categories of institutions which may have passport rights. These include not only the so-called credit institutions—the Community term for bank, defined as an institution which takes deposits and lends—but certain of their subsidiaries. The latter are subject to tight conditions, including a requirement that their parent credit institution holds 90 per cent. of the voting rights in the subsidiary and that they have a full parental guarantee.
The activities liberalised by the directive are listed in the annex to it, which is produced as schedule 1 to these regulations. They range from the familiar banking activities of taking deposits and lending, through a variety of activities regulated under the Financial Services Act, such as dealing in equities or giving investment advice, and include also activities such as safe custody services for which United Kingdom law does not require authorisation.
The precise scope of the activities listed in the directive does not correspond exactly with the coverage of existing United Kingdom regulatory legislation, so, for some activities outside the scope of the passport, incoming European institutions will continue to require authorisation under the Financial Services Act and Consumer Credit Act, as now. This is a complex and technical subject and further guidance on the intepretation of the activities listed in the annex, and their interaction with Financial Services Act and Consumer Credit Act activities, will be made available shortly to the institutions that will be affected.

Mr. John Butterfill: What progress is being made on investor compensation schemes? I do not think that the matter has yet been finalised, but presumably it will be the subject of a subsequent directive.

Mr. Nelson: Yes. I referred earlier to deposit protection. Investor protection is a separate matter and is some way behind. We have some way to go in making progress on deposit protection, top-up arrangements and various other important aspects, and we have even further to go on the investor compensation schemes. Some countries operate investor protection regimes and others do not. We, as my hon. Friend will know, have such a scheme, so investors here should be protected up to a certain level. That matter is being developed, but it is some way behind deposit protection.
The United Kingdom regulators will be able to exercise powers of restriction and prohibition in relation to incoming institutions. That is the key point in answer to the right hon. Member for Berwick-upon-Tweed (Mr. Beith). It is important that, although supervision will vest with a home state authority, there will remain with the host state the ability to exercise certain powers of restriction and prohibition in relation to incoming institutions. I believe that that is set out in regulation 9.
However, in recognition of the reduced role of the host state, the grounds on which they can exercise those powers are narrowed by the regulations. First, there is a specific responsibility for the host state, in co-operation with the home state, to supervise the liquidity of the branches on their territory.
In non-urgent cases the host state's prohibition and restriction powers in respect of liquidity of branches have to be exercised initially by approaching the home state and asking it to take action. However, the directive does provide for the host state to take immediate action in emergencies, and the regulations reflect that.
The host state also retains the right to continue to collect statistical information from EC institutions—banks authorised elsewhere in the Community operating in Britain—in its territory and to require compliance with rules it has adopted in the interests of what the directive describes as "the general good". Prohibitions and restrictions can he imposed for failure to comply with those rules.
The general good is an established concept in Community jurisprudence, the essential principles of which are that the rules should be non-discriminatory, should be proportionate to the ends at which it is directed, and should not duplicate equivalent provision in the home state.
The bulk of the general good rules which will apply to incoming institutions in the United Kingdom consist of conduct of business rules under the Financial Services Act and Consumer Credit Act, rules on advertisements, and the requirement that institutions in the United Kingdom be covered by investor compensation or deposit protection arrangements. The latter will in due course fall away when compensation schemes are moved on to a home state basis. Incoming institutions which join self-regulating organisations will also be subject to their rules in relation to investment business.
On the outward passport, the provisions affecting United Kingdom institutions mirror the provisions for incoming institutions in many respects, particularly as regards the procedures for obtaining the passport.
One of the important concepts that the regulations introduce into the Banking Act is the new concept of a credit institution, which is the nearest the Community has to an agreed definition of a bank. In practice, all building societies and most institutions authorised under the Banking Act qualify as credit institutions. But for the handful of authorised institutions that are not credit institutions, either because they do not lend, or because the deposits they take are not from the public, we need to preserve the Banking Act as it is, which we have done by means of a saving provision in the regulations.
The other important criterion to satisfy if United Kingdom banks and building societies are to be sure of benefiting from the passport is set out in article 18(1) of the directive which says that the passport is granted for all activities listed in the annex to the directive which are
covered by the credit institution's authorisation".
In order to produce a regime which unambiguously delivers that, the regulations set out formal links between the different authorisations which banks may obtain from the different functional United Kingdom regulators for activities on the second banking directive list. The informal communications which already exist between United Kingdom regulators are, in the process, put on a statutory basis, as is the supervision exercised by the Bank and the Building Societies Commission over activities for which at present no specific authorisation requirement exists under United Kingdom law.
We have also had to construct new arrangements to enable United Kingdom bank-owned financial institutions to make use of the article 18(2) passport under the

conditions set out in the directive. The regulations therefore set up a framework for the Bank and the Building Societies Commission to exercise supervisory powers over those institutions, to the extent that they wish to use the banking directive passport to operate in other member states.
The regulations also make provision that is necessary to implement the EC second consolidated supervision directive. The purpose of that directive is to extend the range of circumstances in which supervision of a credit institution has to be conducted on a consolidated basis. Consolidated supervision means, in this context, that supervisors have to be satisfied about the solvency, large exposures and internal control systems not just of the credit institution in its own right, but when taken together with other credit institutions or financial businesses elsewhere in the same group structure. The aim of consolidation is to enable the risks to which the supervised bank is exposed to be properly assessed.
The first consolidated supervision directive established the principle of consolidated supervision for banking groups, whose parent is a credit institution. The new directive goes beyond that, to require consolidation of financial holding companies where a financial institution has as its subsidiaries, either exclusively or mainly, banks or financial institutions, so long as there is at least one bank. The bulk of the directive will be implemented through revised Bank of England and Building Societies Commission prudential notes, to be issued shortly, but the regulations supplement that by providing the investigation powers that are necessary for other EC supervisors whose exercise of consolidated supervision requires them to investigate entities in the United Kingdom.
The regulations also enable the Bank of England to assist other member states' authorities in those cases.
The regulations that we are debating are, by arty standards, long and complex. Without wishing to sound patronising, I am grateful to the House for bearing with me while I go through, in some detail, what some might regard as rather tedious regulations. Others will know that they are extremely important regulations, which will directly affect our banking community, and millions of individual, industrial and corporate customers of banks. They will crucially affect our prospects of taking full advantage of the single market. I know that the House will understand why it was important to set out the regulations in some detail for the benefit of the industry and for hon. Members who take an interest.
The drafting of the regulations has benefited greatly from the many helpful comments received during consultation with the institutions affected, the trade bodies that represent them, consumer bodies and other interested parties. They represent the first step in the process of turning the single market in banking into a practical reality.
The next step is for institutions to take advantage of the opportunities that the process presents. Financial services is an industry where United Kingdom firms are exceptionally well placed to make the most of new markets abroad. In an age when businesses and individuals are becoming ever more financially sophisticated, the prospects of greater competition, innovation and choice will receive an enthusiastic welcome throughout the Community. It is for that reason that I am confident that the regime that the regulations usher in is the right way ahead, and I commend them to the House.

Mr. Alistair Darling: The Minister should console himself with the fact that while he explained the regulations, which are indeed long and complicated, the Chamber has slowly filled. If another place that we are not allowed to mention has been cleared during the Minister's speech, I am sure that he will understand that it is because there is a narrow, if not important, interest in such matters.
The directive will open up the European market in banking and financial services and therefore the principle is right, which is why we shall not oppose it. As the Minister said, Britain has a justifiable lead in the provision of banking and financial services in London and many other parts of the United Kingdom. The industry is a major employer and earner of foreign currency. None the less, substantial concerns remain, and I shall draw those to the attention of the House because unless action is taken serious problems may arise.
The introduction of the European second banking directive will mean a dog's breakfast of regulations throughout Europe, leaving the investor and depositor wondering who to see and where to go when things go wrong in many cases. The directive may allow institutions to shop around for the poorest and least efficient system of regulation, just as the Bank of Credit and Commerce International was able to do. In many cases, the consumer will have no idea where a European bank or financial institution is regulated or what regulation means in each case. The consumer will not necessarily know which body is responsible for regulation in each country. In this country we have six main regulatory bodies. The consumer will not know what safeguards, if any, and compensation exist because the regulatory and compensation systems are different in each European Community member state.
I am in favour of competition in banking services and the services provided by financial institutions, but for there to be competition the depositor or investor needs to be able to make an informed choice about what is on sale and what safeguards are available in the event of failure or complaint. The problem is that each EC member state has a different financial system. A bank in Germany is different from a bank in Britain. The regulatory systems are also different and there are different expectations and standards in each EC member state, let alone those countries which expect to join the EC.
In Britain, we have a multitude of regulatory bodies and a continuing debate about what we need. It is necessary for us to draw attention to some of the problems in the United Kingdom so that we can better understand the potential for problems once the directive becomes operational on 1 January. It is regrettable that the Minister seems to have surrendered in the fight to improve City regulation, when he has not been in office for much more than six months. He said that the Government will not introduce legislation, which is vital if we are to regulate banking services in the 1990s and beyond. By telling the Financial Times on 4 December that the Government will not overhaul the system, which has some spectacular failures behind it, he is allowing the future of regulation to be dominated by producer group interests.
Nowhere is that illustrated more clearly than in the debate surrounding the setting up of the Personal

Investment Authority, which has been dominated by producer group interests while those of the consumer have been left on the sidelines.
Regulation must be as clear and straightforward as possible if it is to succeed. Above all, it must be respected by producer and consumer interests alike. The Government have a duty to give a lead, and they have conspicuously failed to do so. The debate has gone on long enough. It is time to stop the platitudes and to set up a system with clout and, above all, with respect.

Mr. Butterfill: What grounds has the hon. Gentleman for those remarks about the Personal Investment Authority consultation? So far as I am aware, the Consumers Association has been active in making representations and has suggested that there should be greater consumer representation on the PIA. We are awaiting a report from the Office of Fair Trading, so what justification does the hon. Gentleman have for those extraordinary remarks?

Mr. Darling: Every justification. If the hon. Gentleman considers reports in the specialist and the general press surrounding the setting up of the PIA, he will find that there was an unseemly squabble between vested interests and the industry. I know that the Consumers Association and many others have made representations and that some amendments have recently been made, but if the hon. Gentleman studies the proposed composition of the PIA board he will find that it is dominated by the producer groups. The argument turned on which interests should be represented on the board. Would it not have been far better to have a smaller board, with an overall view, rather than trying to produce a board which simply represented the various interests which had to be catered for, especially producer group interests?
The Consumers Association has put forward its views, and many people have expressed concern. Even the Minister did so in his interview with the Financial Times last week. The debate surrounding the setting up of the PIA has been dominated by producer group interests, who are understandably concerned about the growing compensation claims made as a result of the failure of members of the Financial Intermediaries, Managers and Brokers Regulatory Association. I recollect that the hon. Member for Bournemouth, West (Mr. Butterfill) has some knowledge of those matters and an interest in the subject, and I understand why he intervened to say what he did. However, I am sure that he will accept that a casual look at the reports and discussions surrounding the setting up of the PIA will confirm my suspicions and those of many people who were involved. I was speaking to some of them today. The debate has been dominated by the interests of the producer groups, rather than by those of the people who will buy the products.

Mr. Butterfill: rose—

Mr. Darling: I shall not give way as I do not wish to be dragged into a debate on the PIA. I hope that we shall return to that subject in the early part of next year, perhaps just after the referendum is conducted among would-be members. The hon. Gentleman may well catch your eye, Mr. Deputy Speaker, but I do not wish to get bogged down while discussing developments in Europe.
I mentioned the need for proper regulation, and I can think of no better authority to quote than the present


Secretary of State for Social Security who, as we know, is keen on proper regulation of the markets. When the House debated a similar instrument in February 1989, the now Secretary of State for Social Security—then the Economic Secretary—said:
However, it is a mistake to suppose that a good regulatory regime will generally make banks authorised under it less competitive than those authorised under a weak regulatory regime. On the contrary, most customers would prefer to deal with banks which they know to be authorised and supervised by a strict and prudent regulator than banks authorised by a lax and incompetent regulator".
I could not have put it better myself. Would that it were true. It is ironic that the then Economic Secretary should have gone on to say:
However, he"—
the consumer—
will be guided in his judgment by the standards applied by the supervisory body. The expression 'as safe as the Bank of England' still quite rightly carries weight in people's minds. It lends an extra attraction to British banks".—[Official Report, 9 February 1989; Vol. 146, c. 1230–31.]
I wonder if he knew that, even as he spoke, the Bank of England was propping up the BCCI and embarking on a course of action which would ultimately end in calamity. Perhaps the Economic Secretary of the time did not know what was happening, but the general point that he was making about the need for efficient and effective regulation was good and underpinned everything that I shall say tonight about the need for the same efficient and hard-hitting regulation, which is vital not only in this country but in Europe as a whole.
Before dealing with the impact of the directive, I repeat what I said on 6 November, when the House last debated these issues on that occasion in connection with the Bingham report. Two actions are necessary to put the United Kingdom regulatory house in order. First, there must be changes to the banking supervision legislation in the wake of the BCCI disaster. The then Economic Secretary conceded that point.
For example, we must prevent forum shopping. That is of direct relevance when discussing the instrument now before the House because there is a substantial risk that some banks or institutions may be tempted to forum shop. I appreciate that the directive provides that host and home countries should do their best to avoid doing that. It is an illustration of where the rules are not deficient but where the will and effective machinery are not present to ensure that it happens.
I remind the House that what went wrong in respect of BCCI was not that the Bank of England did not have the power to regulate, but that it did not actually do it. So it is no good the Minister saying tonight that the directive provides machinery to ensure that people will not move around Europe looking for the least effective regulatory system. We must be sure that in each and every member state a regulatory regime is in place to ensure that it does not and cannot happen.
As I said, we do not yet have that system in the United Kingdom, and our regulatory system is much better than that existing in some member states of the EC. If we cannot get this right ourselves, we are in no position to complain when other EC member states do not have an efficient system.
The need for additional duties for auditors-which hon. Members in all parts of the House accept to be necessary—will, I hope, be implemented throughout the EC. We have seen in this country, in the case of Maxwell,

how comparatively easy it is to deceive auditors in one country. I wonder how much easier it would be for someone to deceive auditors if institutions are carrying on business in different EC states at the same time.
The need to provide for a lead regulator is of crucial importance, and the right hon. Member for Berwick-upon-Tweed (Mr. Beith) drew attention to that. While the mechanism may in theory be there, many of us are concerned that in practice it may not be in place. There will he many cases of institutions using the directive even though they have their headquarters in one country but be substantially transacting their business in another. It is important to ensure that the regulators in both, or all, the countries concerned make sure that there is a lead regulator and that, at the end of the day, someone accepts responsibility.
In discussing the Bingham report, we saw the difficulties which could arise when one country takes a considerable interest in those issues and there is one bank. In that case it was the Bank of England. We witnessed the difficulty involved in getting the different parts of that bank to focus on a growing problem. How much more important it is to ensure that we have a mechanism which will take account of the fact that institutions will get into trouble not just in one but in many member states, and probably in states which are not in the EC.

Ms. Diane Abbott: My hon. Friend referred to the concern felt by many of us lest the directive lead to lowest common denominator regulations. Institutions may deliberately place themselves in a country such as Luxembourg, which has notoriously lax regulatory standards. As my hon. Friend said, a latent power is not enough. It is necessary to ensure that it is used to achieve proper regulatory standards.
I am sure that people involved in financial services would like to hear the Minister explain how the Government intend to raise regulatory standards in countries such as Luxembourg. We on the Treasury and Civil Service Select Committee have heard from Bank of England officials how they are in discussions with Luxembourg monetary officials. As we have pointed out, however, discussions are not enough. Luxembourg has hundreds of banks and a handful of regulators. Unless there is an adequate system to raise standards, we shall continue to fear that lowest common denominator regulatory standards will apply, especially for the ordinary investor and depositor.
Although it is not wholly relevant to today's debate, we must at some stage consider the whole question of financial regulation in this country and whether we have reached the point at which we should consider splitting the Bank of England's functions so that, as in other countries, we have a separate regulatory body regulating financial institutions.

Mr. Darling: I do not know whether my hon. Friend was present for the debate on the Bingham report when too, said that the Government would have to examine the last point that she made in her intervention. We on these Benches are considering whether those functions should be split.
My hon. Friend made an equally good point about Luxembourg and other countries. Had Switzerland decided to continue to move towards and then join the EC,


other problems might have been brought into sharper focus. Switzerland makes a virtue of the fact that some of its regulations, particularly the secrecy available in that country, are an attraction for people to bank there. If one day Switzerland joins the EC—I suspect that it will, though I do not know when—we shall then have to consider how the directive will work there.
As I have said, there are different standards, expectations and requirements. I welcome the fact that the directive will be in force because without it there would be greater problems, but the Minister must explain what he intends to do to ensure that we go on to the logical next step, which is to ensure that, having got the framework in place, we have an efficient regulatory system in every EC member state. We may have the framework, but we do not have it in practice, and my hon. Friend the Member for Hackney, North and Stoke Newington (Ms. Abbott) was right to draw attention to that.
I have been talking about the need to get our banking supervision in order. The logical next step is to end the dispute about the future of financial services regulation. I regret that, in his interview with the Financial Times last week, the Minister conceded more ground than he had to. We should build on what we have rather than scrap the whole system. It would be a mistake to tear everything down and try to return to the situation which prevailed before 1986.
Some of our regulatory system works well, but some of it does not. The Securities and Investments Board should be without a direct regulatory role, though it should have overall responsibility for providing an actively policed system, preferably through two self-regulatory organisations. I would differentiate between the SROs which would deal with institutions—or at least with people who could be expected to be properly advised and thus have a degree of protection behind them—and the SROs which would deal with what one might call the retail end of the market. The differentiation relates to the product rather than to the institutions themselves. There would possibly have to be another SRO dealing with pension regulation. That is outside the scope of tonight's debate, though we shall have to return to that subject in view of the controversy.
The Government must give a lead to ensure that the regulatory system works and is readily understood. The idea of a Personal Investment Authority is welcome, but I have grave doubts about what it would do, if it could be got off the ground, and the threats made by some institutions do not augur well for its future.
Having put the United Kingdom's house in order, or at least by the end of the debate extracted a promise from the Minister that he will attempt to do that, I shall deal now with the problems in the EC, particularly those arising as a result of implementation of the directive. Is it possible for consumers to identify where each institution is regulated so that they know where they stand? I have in mind a simple notice on the front door saying where the regulator is. The Commission may decide that that is anticompetitive, but it seems to be exactly the assistance needed to ensure that there is adequate competition, so that anyone entering a bank or financial institution will know where it is regulated. If it says, "This organisation is regulated in Luxembourg" and the institution next door

says that it is regulated in the United Kingdom or Germany, the consumer can take that into account in deciding whether to proceed further.
Many institutions in this country have British names and are well recognised but are owned by organisations and institutions based in other EC countries. For example, Cornhill Insurance, a well known company, is owned by a German company. Although the specialists and everyone in the House knew that, I doubt whether the customers of Cornhill knew it. I wonder how many customers of Sun Life know that a French company has a 26 per cent. holding in it. Those who invest and deposit are entitled to know who regulates a particular organisation.
The passport system has substantial merit, but only if we know what that passport means. In evidence to the Treasury and Civil Service Select Committee, which appears in the Fourth Report on banking supervision prepared in conjunction with the collapse of BCCI in the 1991–92 Session, the British Bankers Association made the following useful observation:
there is a danger that the somewhat vague specifications of the duties"—
contained in the draft directive—
of the host supervisor may generate an element of confusion and, thereby, in certain circumstances, allow gaps to occur in the overall scrutiny of an institution's activities".
That point is well made and the Government must take account of it.
It is also important to provide what is called, in City jargon, "a level playing field". I understand that the investment service directive has now been substantially agreed, but it is not to be implemented for about three years. If that is so, where does it leave the many institutions in this country which will not be covered by the banking directive but rely on the investment services directive to receive sufficient authorisation to trade in other EC countries?
When discussing that point in the same debate to which I referred earlier, the then Economic Secretary to the Treasury, now the Secretary of State for Social Security, said:
But if the second banking directive were enacted before the investment services directive, continental banks offering investment services could be given an unfair headstart over the specialist firms. Fortunately, we have been reassured by the Commission's clear statement that its intention is for both directives to be implemented at the same time."—[Official Report, 9 February 1989; Vol. 146, c. 1232.]
I do not believe that that has happened—if I am wrong, the Minister will tell me. I understand that the investment services directive is some three years away. Clearly, that will prejudice the operation of many institutions in this country which need their own directive to start trading in other EC member states. I hope that the Government will urge the Commission to do something about that.
What will happen in cases where the United Kingdom presently regulates if it has to withdraw because the area is regulated by another EC country? How can we be sure that those areas where we no longer regulate because a passport has been obtained by an incoming company will be regulated by another EC country? How will depositors and investors be directed where to go? What happens if they go somewhere else? Many institutions will have their activities regulated partly in their home country and partly in their host country. What will happen to new countries admitted to the EC with no experience of banking supervision in a modern society? How are we to ascertain


where an activity in terms of the directive is carried out? For example, is a money-lending activity carried out where the agreement is made or where the money is passed over?
Those matters may be crucial in the event of a dispute. How will the regulators know what they still need to regulate, for example, where an EC institution provides commodities futures business? Importantly, do the United Kingdom regulators have the resources to look after those problems? Although the Bank of England has had many successes, we know that it has had problems with BCCI. We also know that there are problems with the SIB's self-regulatory organisation. I doubt, for instance, that the Financial Intermediaries, Managers and Brokers Regulatory Association could possibly cope with those new obligations because it is already struggling. Is the Minister confident that this country, let alone other EC member states, has sufficient powers to deal with the problems facing us?
How will prudential supervision be exercised with head offices in one state but much of the business in another? The Minister said that the structure exists to deal with that, but what will happen in practice? Is not that where the whole ethos of self-regulation breaks down? Self-regulation depends on people knowing the business and when to blow the whistle. It is difficult enough to do that in one city, let alone several EC countries. The idea that the industry will know what is going on in every corner of Europe and be able to give a nod to the regulator is patently ludicrous.
The scope for abuse—for another BCCI, another home income plan failure or pension scandal—is immense unless there is active, efficient regulation within the United Kingdom and the EC. There is a substantial risk that the supervisory systems will be harmonised down to the most basic level, not up the highest level. If I am wrong, the Minister will tell us what he intends to do to ensure that that does not happen.
The question of compensation is important. I am glad to hear that the deposit protection directive is under way, but sorry to hear that the investor protection measures are some way down the line. Schemes throughout the EC differ greatly. Here our investor compensation scheme under the Financial Services Act 1986 is not working well. Again, I cite the home income plan problem. However, if self-regulation is to continue, it is important that the compensation schemes work, because compensation is one of the best ways to ensure that self-regulation works.
We shall continue to see banks and institutions with British names owned elsewhere in the EC. I hope that we shall see the same thing happening with British firms owning EC institutions. It is all to the good, provided that they are properly regulated. Legislation to set up a regulatory system with teeth is good for the consumer, efficient for the industry, and vital for the good name of the City. Good regulation is a good selling point and will ensure the sale of good quality products.
We have a justifiable lead in providing banking and financial services and it is vital that the directive does not tempt a lowering of standards in the name of harmonisation. I cannot say that I am optimistic. Although the Minister is tempted to throw in the towel about the argument at home, I hope that the Government have the stomach to continue the fight for high standards in Europe. Above all, we need a clear statement of what the Government intend to do at the next stage to ensure that the framework in the directive is built upon, so that

the interests of investors and depositors, and the reputation of those institutions, are maintained at a high standard.

Mr. Terence L. Higgins: I shall not detain the House for more than a few moments. We have a massive document before us and I could raise many points arising from its wording. However, there would he little point in doing so, because we must either take it or leave it. We have no way to amend the vast amount of wording, although much of it relates to other legislation to which the House has paid considerable attention in the past. That is not a satisfactory position. As we do not have time to examine the document in detail, I shall simply make one or two technical points.
On page five the basis on which the regulations are made is said to be the fact that
the Treasury are a government department designated (a) for the purposes of section 2(2) of the European Communities Act 1972".
I greatly welcome the fact that my hon. Friend the Minister has taken over responsibility for financial matters, because I always thought that the split between the Department of Trade and Industry and the Treasury was not a happy one. Various matters tend to fall, if I may use the expression, between the two stools.
The regulations cover several matters relating to the Insurance Companies Act 1982 which I understand have not been transferred from the Department of Trade and Industry to my hon. Friend the Minister. The basis on which the order is made refers to the Treasury. I have forgotten why that Act refers to the Treasury when all other cases refer to the Secretary of State being a designated Minister. Suddenly, when we get to page 58 we find that, like the smile on the face of the Cheshire cat after it has departed, there is reference to a Secretary of State having power to deal with such matters. It is not clear why that does not appear at the beginning of the authority for making such regulations. Generally speaking, it does not seem to be a satisfactory way to proceed.
My second point is that we are renowned for regularly implementing European Community directives by producing such regulations. One feels bound to say that other countries seem to be much slower at implementing directives. That can have a serious adverse affect on British companies in the interim period. I think that we should have a set rule that, whenever we have a specific directive to implement, we should be told in the clearest terms the extent to which other countries in the EC have already taken such action. Perhaps my hon. Friend can explain the position. In many instances I think that we go ahead of the game, which has an adverse effect on British companies.
Given what I have said about the inability to amend such documents, I am worried that there is a tendency for regulations of this sort, which implement a particular directive, to be used to extend legislation on other matters beyond the strict scope of the directive. If that is so, it is done without our having the ability to amend it. I have a suspicion—I put it no higher than that—that some of the regulations are being used to make changes to our law which, on the strict interpretation of the directive, are not necessary, but which would otherwise need to be put before the House in a form of amendable legislation.
Those are technical issues. None the less, in terms of the House getting a grip on what is happening, not merely in


the European legislation, but in the powers that go beyond the requirements of European directives, the issues are important. I take the opportunity to bring those matters to the attention of the House. Perhaps the various bodies in the House could give further consideration to whether possible abuses of this sort—I am not saying that it is so in this case; my hon. Friend will tell me whether it is so—can be avoided.

Mr. A. J. Beith: The final remark of the right hon. Member for Worthing (Mr. Higgins) echoed a theme which the Prime Minister took up on other aspects of Community legislation relating to the environment and health. Certainly, from my experience, it seems that there are times when those in the United Kingdom who should be implementing the regulations seem to use them to ride other hobby horses which go far beyond the original intention. It would be welcomed if the Government examined the matter generally.
The Government should do something to put the genuine activities of the Community and the Commission, such as the single market, in their proper context and see them for what they are, not cause them to be complained about because of other things that have subsequently been added to them. That is a sensible suggestion which the Government may care to examine.
Many people will be disappointed to learn that the second banking directive is not a directive to British banks to pass on interest rate reductions to their customers, to have a sensible long-term policy towards small business and to stop imposing charges on customers without telling them in advance that they are doing so.
We must break the sad news to our constituents that the second banking directive is of a different character. Nevertheless, it is important to them because it is necessary to ensure that we have adequate banking supervision in the future and that banking and financial institutions and financial services can take advantage of the single market. Indeed, it is a field in which we would expect the United Kingdom to do well, with its considerable experience and expertise in financial services.
The recent experience of the Bank of Credit and Commerce International case must cause us to examine with great care banking supervision and the dangers that might lie in a bank being supervised from a country that could not manage that supervision well. It is not a chauvinistic or nationalistic point. In that context, it must be said that the Bingham report revealed that the Bank of England showed many deficiencies in its supervision of BCCI. Therefore, we are not holding Britain up as an example of a country which has perfect banking supervision.
The BCCI case also showed that Luxembourg was clearly nowhere near adequate to the task of being the lead regulator of the BCCI. The Luxembourg authorities became conscious of that fact, and drew the attention of other countries' regulators to it. At one stage the Luxembourg authorities would have welcomed the Bank of England, where so much more BCCI business was being done, taking on the responsibility of the regulator.
The Minister dealt carefully with many aspects of the matter in his thoughtful and lucid remarks. He gave some

reassurance, not least that the matter was actively in his mind and that he was seeking in various other ways to extend the available protection and improve banking supervision, which is deficient.
I do not want to go into the details of the BCCI case because more discussions about it will take place. The Treasury Select Committee still has the matter in its sights and will have further discussions about it. The Committee has issued reports that bear on the matters which we are discussing tonight. The Committee expressed concern about the second banking directive in its fourth report, to which reference has already been made. The Committee also expressed anxiety about the assessment of regulations—how we will know that we can rely on the capacity of other countries as lead regulator and how they will know that they can rely on us.
The absence of any real system to assess supervisory standards was the focus of specific comment by the Committee. The Committee said that there was clearly a need for some mechanism to assess supervisory standards. At present, all we have is the Basle committee. The matter is not the responsibility of that committee. It does not have that sort of locus, any formal machinery or any standing to judge the supervisory standards in member countries, let alone non-member countries. It is a matter of continuing concern which I hope the Government will keep actively in mind.
The issue has been raised by other hon. Members, and I think that perhaps sufficient has been said to alert Ministers to the widespread concern. The report raises a question of how we will organise banking supervision in the United Kingdom in the future. The BCCI case has focused attention on banking supervision, and caused many of us to believe firmly that there is a case for separating banking supervision from the work of the Bank of England as monetary authority. I believe that the Bank should have independent responsibility in the conduct of monetary policy. In some ways that makes a much stronger case for separating those two areas. If anything, the United Kingdom has it the wrong way round. Perhaps the Bank should have been more accountable for its supervision of the banking system and less subject to accountability for monetary policy.
I hope that the Government will continue to examine the arguments for a system such as the German one in which a separate institution has responsibility for banking supervision, but which draws on the experience and knowledge of the Bundesbank.
There can be no effective system of monitoring and supervision that does not draw on the expertise which the central bank is bound to have. But there is a strong case for a separate focus of responsibility. Also, there is obviously a clear case, so long as the system remains in its present form, for a substantial reorganisation of the Bank of England, such as it has already begun. I must add that I remain concerned that there appears to have been no disciplinary action and no resignation and no one has moved jobs within the Bank of England following the BCCI case.
I see the directive as an appropriate part of the moves towards a single market. But before the Commission becomes too excited about its successes in moving towards a single market, it should look at other matters on which progress seems to be slow. The hon. Member for Edinburgh, Central (Mr. Darling) mentioned the insurance market. I understand that the pensions fund


directive has not yet been fully agreed. That is another area of financial services in which uncertainty remains and sufficient progress has not been made.
The more that we move towards the single market, the more apparent it will become that it is difficult to operate a single market in financial services without a single currency. It will also become more apparent that the movement of capital, which is inherent in a free market in financial services, will make it difficult for national currencies to maintain their position.
If institutions increasingly operate across national boundaries with free movement of capital and if that movement is further enhanced by the freedom of customers in each of the member countries to place their deposits with, or take their loans from, banks in other countries, the amount of capital flow across frontiers will become ever larger and will increasingly dwarf the reserves available to central banks to defend individual currencies. That reinforces my view that we must move to a single currency if we wish to operate a free market—which I do.
I know from the speeches that the Minister made before he took up his ministerial post that I shall receive a sympathetic hearing from him. I do not wish to embarrass him unduly, but I hope that he is fighting his corner on the issue in government. The capital movements that are implicit in the single market in financial services, along with the effects that we have already seen of the removal of restrictions on capital movement, will become incompatible with the maintenance of national currencies at differentiated levels by traditional means.
Increasing capital movements will make it that much more imperative that we stop talking about opting out of the single currency and dedicate ourselves to achieving the convergence conditions. I cannot understand why anyone is against the convergence conditions. They are supposed to be good for the economy in any case, so we should hardly argue about them.
I see the directive as part of the process of development in Europe, which it is difficult for Britain not to be part of, still less stop. However, that does not stop me wishing to express anxieties about whether, when combined with other regulations under discussion, the directive will be sufficiently effective in protecting bank customers from experiences such as that which BCCI customers faced. There will never be another fraud like BCCI. It is a mistake to design one's system to suit the last fraud. But it certainly will not be the last banking fraud. Our system must be strong enough to be alert to and deal with potential fraud.

Mr. John Butterfill: I congratulate my hon. Friend the Minister on the action that he has taken in bringing the directive before the House. It is true to say that the regulations amend some important legislation that we passed in the House after lengthy debate. I participated in scrutinising some of that legislation, such as the Banking Act 1987 and the Financial Services Act 1986.
We must recognise that the financial services sector is important for the United Kingdom. The ability of our financial institutions to operate freely throughout the European Community is of vital national interest to us. There are immense opportunities for British business in that sector.
I pay tribute to the work done by the Minister and his colleagues in the Treasury in securing the directive. It is true that the restraints and controls in many other European countries are not so strong as in Britain, but I am reassured by the fact that those who operate in the United Kingdom under the terms of the directive will come under the control and supervision of the relevant supervisory authorities in the United Kingdom.
The hon. Member for Edinburgh, Central (Mr. Darling) complained about investor compensation. He should remember that the United Kingdom is the only EC country which has in place an effective compensation scheme. The reason why we have not reached a conclusion on that is largely the inadequacy of the provisions in other member countries. The hon. Gentleman would be right to say that we must not drop our standards we must try to persuade other countries to conform to them. However. to denigrate our standards when by and large the Financial Services Act has worked well is an unfortunate line to take.

Mr. Darling: The hon. Gentleman is wrong. There are investor compensation schemes in other EC countries. Admittedly, some of them are not very good—that was my point. I accept that we have such a scheme in Britain, but I am sure that the hon. Gentleman will accept that it is not without justifiable criticisms.

Mr. Butterfill: I accept that our schemes are not yet perfect. They are being developed. They are self-regulatory regimes. That is infinitely preferable to a statutory form of regulation, which the Labour party views with some enthusiasm. Countries which have such regimes do not view them with quite the same enthusiasm. They look at ours with envy. Nevertheless, our schemes could be improved. I hope that the Personal Investment Authority will be established and will do its work in a much more efficient way than the present components of what will be the PIA. I have some doubts about whether that can be achieved without further legislation.
It will probably be necessary to give the Securities and Investments Board the power to direct people into a particular self-regulatory organisation and get rid of the SIB's own regulatory organization—which is an unfortunate development. Not many of us anticipated the development of that organisation when we debated the Financial Services Act 1986.
On balance, we can feel some satisfaction with the system that we have set in place in Britain. It is infinitely superior to that which exists elsewhere in the Community and in the world. Our byword must be to improve consistently on it, not simply to run it down. Therefore, I congratulate the Minister on the work that he has done on the directive. I wish him success in future discussions on other aspects of financial services.

Mr. Nelson: With the leave of the House, I should like to respond to the debate. I thank all hon. Members for their contributions to the debate. It is an important subject, as all who spoke recognised. It directly affects the prospects, employment and profitability of the services offered by our banking and financial services community and industry in Europe. Several of the points that have been made in the debate are extremely cogent. They will


certainly be taken on board by the Government. They are helpful to me in scrutinising future legislation and the implementation of other directives.
The hon. Member for Edinburgh, Central (Mr. Darling) started and finished by talking about the separate but related issue of financial services regulation and supervision. He suggested that I had thrown in the towel at an early stage in my ministerial career on that issue. I hasten to assure him that the principles which lay behind many of the representations that I made as a Back-Bencher are alive and well in the Treasury. I am seeking as best I can, as I did then, to improve depositor and investor protection in Britain. However, given the collective wisdom of fellow Ministers, it is not always as easy to say or do certain things as it was on the Back Benches. I hope that I shall not "go native" too fast, because the matters involved are important, and not subjects of partisan difference.
I think that I agreed with what I thought the hon. Gentleman was saying. I do not want to abandon the existing legislative structure; I see no great advantage in embarking on early, hasty and wholesale reform of our supervision of financial services. After all, such reform visits great uncertainty and great costs on the industry. Unless there is consensus on what is to replace the current arrangements, and a clear way forward which will deliver higher standards of investor protection, it is a foolhardy Government who embark on such a course without lengthy consideration and consultation.
As I have suggested outside the House—I hope that we shall have further opportunities to debate these critical issues inside it—I believe that much can be done within the existing structure to beef up the system of supervision and regulation within the Financial Services Act. It would not be wise to toss aside legislation passed by the House of Commons, to undermine the authority of those who are trying to do a good job, and to embark on an uncertain course.

Mr. Darling: rose—

Mr. Nelson: Let me make a point that relates to what the hon. Gentleman and others have said about compensation. There is a growing feeling in financial services and banking that there is a trade-off between the costs of supervision and regulation on the one hand, and the costs of paying compensation on the other. Many people would be content to pay for a high standard of supervision and regulation if they did not expect to have to pay increasing amounts of compensation, which this year has amounted to some £50 million.

Mr. Darling: I wholeheartedly agree with what the Economic Secretary has said about compensation and the need for tough regulation. I also appreciate that, as a member of the Government, he is not an entirely free agent: as long as the Chancellor remains his boss, he may find that he is constrained. Does he accept, however, that—while there is much to be said for legislating in broad agreement with all the people who will be affected—unless the Government say that they are prepared to step in and take a lead, many people who do not want change and are happy for the present mess to continue will see what he has said as a sign that that can go on for much longer, perhaps for years, before the Government are driven to act? I urge

the Economic Secretary to get a grip on the situation now, rather than waiting until another crisis turns up on our doorstep.

Mr. Nelson: I hear what the hon. Gentleman says, but imperatives of a different order are also at work. There is, for instance, the liability that institutions and SROs are having to incur to raise the money among their authorised firms to pay for new orders of compensation: that in itself is driving the case for reforms. It is not really a question whether the Government are forthright or reluctant to bring about change: change is being forced on the system in any event. The City wanted self-regulation, and it now has a high degree of self-regulation; so it must now self-regulate.
In the process of consultation over PIA, I look to the SROs and the firms involved to find a positive way forward. I am limited in what I can and should say about such matters at this stage, but that strikes me as a way forward that is on offer—a way that takes account of the representations that have been made, and the latest response to the consultation process. That reponse has pointed to a number of important changes that should give confidence to potential participants. I hope that a positive, constructive approach to the PIA proposals will be adopted.
The hon. Member for Edinburgh, Central said that it was not enough for supervisors to have the powers: they must exercise those powers. That point was echoed by the right hon. Member for Berwick-upon-Tweed (Mr. Beith), and I think that it was the most critical observation of all. Even if we have the best possible system of supervision, if we do not have the right people and the willingness to exercise the powers concerned the system will be wasted. Similarly, a deficient system may work if good people are operating it. A perfect system can never be arrived at, but any system will involve problems. We can do much to improve resources, in terms of ability, numbers and the financial resources available to supervisors and regulators; we can build on the excellent work that has already been done.
The hon. Member for Edinburgh, Central spoke of the duty placed on auditors to report. That duty was announced in response to Sir Thomas Bingham's report on BCCI. Rightly, it will be subject to consultation with the professional bodies; it is important that we get it right. The bodies concerned are adopting an extremely constructive approach, for which I am grateful. I also appreciate what the hon. Gentleman said about the common approach of hon. Members on both sides of the House to the need for a duty on auditors to report.
The hon. Gentleman asked about notices on doors; he wanted to know whether people would be aware that a European institution was different from an authorised bank, and would know what sort of country was supervising that institution. Registers will be issued by the Bank of England and other institutions clearly stating the identity of the home country and the home supervisor. There will be procedures to ensure that misleading names are not used by companies passporting their services into other countries.
It is not possible to go too far down that line, however: at the end of the day, we are aiming for a common market for these services. We are not trying to differentiate; the central objective must be common supervisory standards, and a universal reliance on the common application of


those standards throughout member states. We would not want people to have to choose—hut there should be no need to choose the bank with which one deposits money according to the identity of its home supervisor.
The hon. Gentleman asked whether there were gaps in supervision. I can tell him that memoranda of understanding are being drawn up between the various member states to ensure that no such gaps exist. He also asked what was happening about the investment services directive, on which common agreement has virtually been reached after a protracted negotiation period. Both the investment services directive and the capital adequacy directive—technical as they are—represent major strides for Britain in Europe. I believe that they will protect our main interests at home and in other member states, while ensuring common standards of protection for those who use the services involved. They will also give major opportunities to British firms that are moving into the rest of the European Community.
We would have liked the investment services directive to come into force at the same time as the banking directives, as was originally planned, to give investment firms more generally the passport at the same time as the banks; but we saw no benefit in agreeing, at an early stage, an investment services directive that would restrict activities and damage markets. The United Kingdom and her allies were right to hold out in negotiations for the liberalising directive agreed by the EC Finance Ministers on 23 November.
Many of the larger UK-based investment firms in competition with EC banks are already established in the member states in which they wish to operate. These firms may not need the ISD passport to continue to compete effectively. United Kingdom markets will in turn continue to be as open to EC and overseas investment firms as they are at present.
The ISD will come into force on 1 January 1996. Although we might have preferred an earlier date, this is realistic, as implementation of the rules to underpin the directive will require considerable work by United Kingdom regulators and firms.
The hon. Gentleman asked how new members of the European Community will comply with the regulations. Phased provisions enable countries acceding to the Community to adopt and translate their laws to comply with the Community's. This, like many other directives, will be an essential part of that process. We must not be prepared to extend the passport to countries that do not comply with the standards of supervision and the regulations.
The hon. Gentleman asked whether we have enough resources. I think that we have adequate resources but could probably do with some more in the banking and investment sectors. I hope that we shall achieve consensus on the proposals for the financial services and banking sectors.
The hon. Gentleman and others dwelt on the importance of adequate compensation. The Commission has proposed a working party on the depositor protection directive, which contains important, sensitive and costly issues for the banks to consider.
My right hon.Friend the Member for Worthing (Mr. Higgins) made some extremely interesting points. However hard one tries, one can never prepare for all the questions that one is asked, and his point fell into that category. He said that it was not satisfactory that we could

not amend the regulations. I understand that, but, as I said earlier, they could have been subject to the negative resolution procedure. We brought them before the House for debate because we wanted to take on board the views expressed and to take account of them in implementing the regulations.
As my right hon. Friend will know, the Treasury and the Department of Trade and Industry issued a consultation document on this matter. He asked why the Treasury is responsible for insurance, whereas the name of the Secretary of State appears later in the regulations. The European Communities Act 1972 gives the Treasury power to make provision in relation to credit institutions. The amendments to the Insurance Companies Act 1982 fall within that designation. The Secretary of State retains his responsibilities under that Act and, as my right hon. Friend pointed out, the regulations reflect that.
My right hon. Friend asked an important question about what other member states are doing to implement the directive. I asked the same question of my officials, and the answer is that other member states are implementing it in the same way at about the same time.
My right hon. Friend asked an interesting question about the changes in law beyond the scope of the directive that are unamendable. I hope that I can assure him that the scope of the regulations does not extend beyond what is provided for in the directive. That shows the value of bringing measures before the House and of giving hon. Members an opportunity to question whether what is being proposed is beyond the scope of the directive. The House must have the opportunity to revise, amend and vote on such measures.
The right hon. Member for Berwick-upon-Tweed asked how we can rely on other supervisors. As I said in opening, this is the key question. Other supervisors will have to implement the same standards. As my right hon. Friend the Chancellor announced in response to the Bingham report, a peer group review process involving the G 10 supervisors committee and the EC banking advisory committee will ensure that the best ways forward are implemented and that supervisory standards are assessed.
The Government and the Bank propose the establishment of peer group reviews under this process. Member states other than the United Kingdom will be responsible for accepting applications for authorisation from banks. They will have to comply with legislation under this directive. They will then be required to notify the Bank of England that a European institution wishes to passport its services into the United Kingdom and we shall have certain powers.
I refer hon. Members to regulation 9, which sets out requirements on such things as liquidity and compliance with regulations. If they are not complied with, they can provide the basis for restriction or revocation, and action can be taken by the host state.
The right hon. Gentleman mentioned the fascinating question of a split in central banking responsibilities, with supervision of banking being hived off from central banking functions. That point was echoed by the hon. Member for Hackney, North and Stoke Newington (Ms. Abbott). I referred to this at some length on 5 or 6 December in my speech on BCCI, in which I set out as clearly as I could the arguments for and against.
I said that the Government are not minded to do that, but no doubt the legitimate debate on it will go on. On the basis of BCCI, Lord Justice Bingham found no case for


such a change, although many hon. Members will know that other EC members have such a separation of powers with a banking commission as well as a central bank. With the arrival of a European central bank or independent central banks within member states, there is often a more compelling case for the separation of such powers. As we do not have that, we have no intention of changing our present arrangements.
I am most grateful for the long interest of my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) in these issues. He emphasised the importance of banking and financial services to the United Kingdom economy and the great opportunities that will result from the introduction of the directive and the regulations. I wholeheartedly concur with him and pay tribute to the way in which, over many years, he has brought his experience and keen interest in investor and depositor protection to the attention of the House, to the benefit of the legislation that has been passed.
We have seen today the fruition of contributions and efforts by many hon. Members over many years. We shall not get it absolutely right. Sadly, there will be failures and collapses in the future. We cannot devise a wholly fail-safe system, but we can improve the situation substantially. We can improve the opportunities for British business, banks and investment companies abroad to ensure not only their greater profitability, growth and employment for the future but, critically and above all, the highest standards of investor and depositor protection, which have always been the hallmarks of attracting funds to this country and which are why Britain—not only the City of London but Scotland and other parts of the country—remains the financial centre of Europe. We should be proud of that, and should be careful to enhance and protect it for the future. The regulations will bring about exactly that possibility.
It is with much confidence and pleasure that I invite the House to agree the banking directive, which will be an enormous advantage and opportunity to these great industries.

Question put and agreed to.

Resolved,
That the draft Banking Coordination (Second Council Directive) Regulations 1992, which were laid before this House on 17th November, be approved.

Package Travel

The Parliamentary Under-Secretary of State for Technology (Mr. Edward Leigh): I beg to move,
That the draft Package Travel, Package Holidays and Package Tours Regulations 1992, which were laid before this House on 1st December, be approved.
The regulations are intended to implement in United Kingdom law the EC directive of the same name. This is an important landmark in the development of consumer protection in this area.
The directive and regulations have three main objectives. The first is to ensure that organisers and retailers of packages maintain proper professional standards in their dealings with their customers. The second is to require organisers and retailers to take full responsibility for the proper performance of their contract. The third is to ensure that organisers and, in some circumstances, retailers have security for the refund of any advance payments made by consumers, including the cost of repatriation in the event of insolvency of the organiser or retailer. It may be for the convenience of the House if I indicate very briefly how the regulations address these objectives.
Regulations I to 3 deal with definitions and application. Basically, the regulations would apply only to packages sold or offered for sale after 31 December 1992, but the provisions regarding protection against insolvency affect all contracts in place on 31 December 1992 which remain to be performed in whole or in part. This means that organisers or retailers must on that date have security for all prepayments that they hold. It would clearly be unacceptable if a tour operator became insolvent at, say, the end of January, and those customers who had entered into contracts subsequent to 31 December were protected, while those who had entered into contracts before that date were not.
Regulations 4 to 6 deal with requirements as to brochures. Brochures must not contain any misleading information, must contain—in so far as it is relevant to the package—at least the information contained in schedule 1 and, subject to certain qualification, will be binding on the organiser.
Regulations 7 and 8 deal with information to be provided before the contract is concluded. This includes, for example, passport and visa requirements, details of travel arrangements, and the name, address and telephone number of the organiser, or a representative of him, whom the consumer can contact if necessary.
Regulation 9 deals with the content of contracts. The contract must contain at least the elements spelt out in schedule 2, unless these are clearly irrelevant to the package in question, and the consumer must be given a copy of the contract in writing.
Regulation 10 gives the consumer certain rights to transfer a booking.
Regulation 11 deals with the important question of surcharges. Surcharges are permitted only under certain restricted circumstances: specifically, to deal with variations in the price of fuel, fluctuations in exchange rates or increases in certain dues and taxes.

Mr. Malcolm Bruce: On surcharges, does the hon. Gentleman not think it a little odd that this statutory instrument is labelled "Consumer Protection" when most


consumers in this country wish to be protected from the existence of surcharges at all? He is legalising a practice that most people want to see abolished.

Mr. Leigh: This is a very interesting point and it has been a difficult balance to strike. The package holiday industry is highly competitive and the view held by Government is that generally the consumer gets an extremely good deal. It would be possible, of course, for the Government to outlaw surcharges. If we were to do that, the only result for the general consumer would be to push up prices. I repeat that the consumer in this country generally gets a very fair deal and very good value holidays. We believe that we have struck the right balance. We do not believe that it is opportune to change long-standing practice in this country.
In this case, therefore, we have gone beyond the strict requirements of the directive to provide that the organiser must absorb the first 2 per cent. of any increase. I hope that that will go some way to allay the concern expressed by the hon. Member for Gordon (Mr. Bruce). This mirrors the current requirements of the code of practice of the Association of British Travel Agents.
Regulation 12 permits the consumer to withdraw from the contract without penalty if there is a significant alteration to an essential term of that contract, and regulation 13 spells out the consumer's rights in this situation and also in the event of cancellation by the organiser.
Regulations 14 and 15 deal with the rights of the consumer while the contract is being performed. Under regulation 14. a duty is placed on the organiser to make alternative arrangements if a significant proportion of the services contracted for are not provided. It also provides the consumer with a right to compensation where appropriate and a right if necessary to be returned to his point of departure.
Regulation 15 is important and makes the organiser, or possibly in certain circumstances the retailer, strictly liable for the performance of the contract. This means that it will no longer be open to the organiser to disclaim responsibility if, for example, a hotel is not of the standard, or does not offer the service, which has been promised. There are certain qualifications. For example, the organiser is not liable for a failure due to an event which he could not even with all due care have foreseen or forestalled, and liability other than for death or injury may be limited, so long as that limitation is reasonable.
This brings me to regulations 16 to 22, which deal with security for prepayments and against the possible need for repatriation in the event of insolvency. I would like to take a moment or two to explain our approach to this very important provision in the directive.
The first point to stress is that the number of organisers or establishments in the United Kingdom that offer packages is extremely large. There are no statistics, and any estimate can only be in the nature of an educated guess, but we believe that the total number is between 10,000 and 20,000, not counting the many people who organise packages on a voluntary basis. Many of those who offer packages are not tour operators at all, but hotels and similar establishments which offer a tourist service—perhaps golf, or fishing—in addition to accommodation. Among tour operators proper, the range varies from

the giants of the package travel trade to one-man—or, frequently, one-woman—companies exploiting some niche in the market.
Faced with this diversity, the philosophy that we adopted was to offer the widest possible range of choice for meeting the requirements of the directive. These choices are spelt out in the regulations.
Regulation 16 is a general provision and contains exceptions for packages covered by the existing air travel organisers licence system—which will not, of course, be affected by the regulations—or by arrangements in force in another member state. There are two particular points about this regulation which I would like to draw to the attention of the House. The first is that we have not provided how the requirement to have arrangements for repatriation should be met. This is because there are a great many possible ways of meeting this requirement, and it would have been over-prescriptive for us to try to list them all. The second is that we have provided that, for a period of three months following entry into force of the regulations, organisers will not have to have in place one of the specific forms of protection spelt out in regulations 17 to 21, though they will still be committing an offence if they do not have sufficient security to protect consumers if they became insolvent. This is because the interval between approval of these regulations and their date of entry into force is likely to be very short indeed, and we needed to give the very large number of operators who currently have no protection time to make appropriate arrangements.
In addition to meeting the general requirements of regulation 16, organisers of packages will need to meet one or other of the alternative provisions set out in regulations 17 to 20 or, if they are not acting in the course of business, regulation 21. Regulations 17 and 18 provide for organisers who wish to follow the well-established bonding system which is already mandatory for holders of air travel organisers licences and is operated on a voluntary basis by the main trade associations in the industry. It is envisaged that most, if not all, of those trade associations will become bodies approved under the regulations by the Secretary of State as having bonding arrangements in place which will meet the requirements of the regulations.
Regulation 19 offers an alternative to bonding in the form of insurance, and is designed primarily for those organisers who are either unable or do not choose to join one of the "approved bodies" provided for in regulations 17 and 18.
Regulation 20 provides that organisers may, if they wish, meet the requirements of the directive by placing pre-payments in a trust account from which they can be withdrawn only on completion of the contract. This option is designed primarily for hotels and similar establishments, which take only a relatively small proportion of the cost of a package by way of pre-payment.
Finally, regulation 21 makes special provision for the voluntary sector. The effect of this regulation is that an organiser not acting by way of business need ensure only that any payments that he receives are kept separate from his personal bank account so that they cannot he seized by his creditors in the event of his insolvency.
I can pass over the remainder of the regulations very quickly. Regulation 22 deals with offences arising from breach of regulations 20 and 21. Regulation 23 calls up the enforcement schedule, regulation 24 provides a due


diligence defence against any breach of the regulations which carries criminal penalties, and regulation 25 makes rules regarding the liability in the case where a person commits an offence under the regulations as a result of an act or default committed by some other person. Regulation 26 deals with prosecution time limits. Regulation 27 provides that no contract shall be void or unenforceable, and no right of civil action shall arise, by reason only of the commission of an offence under the regulations, while regulation 28 provides that an organiser cannot escape his contractual requirements under regulation by making contracts subject to a law other than that of the United Kingdom.
The regulations will for the first time provide a thorough and comprehensive framework for the protection of customers of packages. In most places, they follow closely on the provisions of the directive. They aim to strike a balance between the legitimate expectations of consumers and the need to ensure that competition is not restricted and that consumer choice is not reduced by overregulation.
I stress that, in preparing the regulations, we have sought to place the minimum extra burden on industry consistent with proper implementation of the directive and proper protection for the consumer. It was not an easy balance to strike. Many people would have had us go further while others did not want us to go so far.

Sir Michael Neubert: If, as he says, the Minister is anxious not to impose undue burdens on the industry, why has he sought to add additional requirements to those required by the directive which this measure enforces?

Mr. Leigh: In fact, the additional requirements that we have added are very small. They deal with surcharges, a point with which I dealt in response to the hon. Member for Gordon. When I was responsible for consumer affairs, which have subsequently become the responsibility of my noble Friend Baroness Denton, I was determined to ensure that while we carried out the spirit of the directive—if we did not do so, we could have been taken to the European court—we did not want to impose any more burdens on British industry than was absolutely necessary. It is essential that the Department of Trade and Industry abides by that principle. We have been wholly loyal to the spirit of the directive and concerned to implement it properly in the United Kingdom, but we have also been concerned not to impose any unnecessary burdens on industry.
I recognise that some aspects of the regulations are controversial. It would not have been possible to please everyone and we have not tried to do so. Nevertheless, I believe that we have got the balance about right and that the new regime which will be created by the regulations will bring valuable benefits to the consumer. I commend the regulations to the House.

Mr. Nigel Griffiths: The Minister is not only at the Dispatch Box but in the dock. For three years the Government have refused Labour's pleas for better protection for holidaymakers. Now Ministers are being forced to take action by the European Commission,

but they have left it until the very last minute. They have conducted the minimum of consultation with business and others and have ignored critical representations by those who know far more than them—travel agencies, enforcement departments and the consumer movement.
We have forced a debate on the Floor of the House because of widespread criticism of the Government's legislation: the Association of British Travel Agents has told the Minister that the legislation is unworkable; trading standards officers say that it is unenforceable; and the Consumers Association said in a letter:
These provisions are so flawed that the government will be actionable in the European court for failing to implement the Directive and adequately protect consumers.
For three years, since the directive was published, the Government have dragged their feet and failed to introduce tough controls over rogue elephants in the travel trade. They have dragged their feet time and again and their inaction has allowed disreputable companies to print misleading brochures, to lie about holiday facilities available and to avoid paying any compensation for that, to cancel flights, to change arrival and departure times at will, to impose surcharges and, worst of all, to take customers' money without holding any insurance against insolvency.
Tens of thousands of holidaymakers have been taken to the cleaners in the past year alone because the Government have refused to act until forced to do so by the European Community. The European Commission is now forcing them to introduce this measure by 1 January. However, the Government's proposals are so weak that some of the abuses that I have listed will continue virtually unabated. Because the measure is being introduced at the last possible minute, it is riddled with loopholes and is weaker than the current voluntary code of the Association of British Travel Agents. With 21 days to go, key sections of the travel industry have no time to implement the legislation. It is a recipe for chaos.
Let us consider one key aspect of the measure—bonding, or insolvency insurance. Three years ago this month, the Minister's predecessor, the hon. Member for Mid-Worcestershire (Mr. Forth), said that the financial provisions were the guts of the measure. No wonder the current Minister skipped over that so quickly. He cannot find anyone outside the Government who believes that the bonding regulation will work.
In a report dated 8 December, Keith Betton, speaking for ABTA, told the Minister:
The present Regulations will result in piecemeal protection for consumers without there being any guarantee of refund or repatriation where insurance or trust options are adopted by an organiser that subsequently fails … the government appears to have failed in its obligations to properly implement the Directive.
That is a point I made earlier with reference to the Consumers Association.
The Minister also knows the views of the people whom he wants to police the measure. Mr. Bob Wright, who chairs the key sub-committee of the Institute of Trading Standards Administration, told the Department of Trade and Industry:
The present draft regulations are seriously flawed and should be redrafted if they are to be meaningfully enforced".
These seriously flawed enforcement powers are set out in paragraph 3(1) of schedule 3.
Keith Hale, a senior executive officer of the Local Authorities Co-ordinating Body on Food and Trading Standards, which co-ordinates consumer enforcement on


the Government's behalf, said in his submission to the Minister that this measure gives enforcement officers powers to inspect bonding documentation only
when there are reasonable grounds for suspecting that an offence has been committed.
He asks what grounds are likely to be considered reasonable and concludes:
The obvious answer is of course when a company goes to the wall … in other words officers will only be able to act when it is too late".
That is the view of people whom the Minister expects to enforce the measure. That advice has been ignored by the Minister, by the Government and by his party.
There are not enough enforcement officers to carry out checks on rogue travel companies. The Minister should know that trading standards officers are currently 10 per cent. understaffed and have more laws to enforce than ever.
By ignoring the views of people in the travel business, the enforcement agencies and the consumer movement, the Government are leaving many travellers far worse off. By bonding without licensing, the Minister is giving thousands of consumers a false sense of security. Bonding without licensing will be unenforceable. The trade says that it will not work—the Minister says that it will. The enforcement officers say that it will not work the Minister says that it will. The consumer organisations say that it will not work—the Minister says that it will.
Clearly, the Minister trusts no one else's judgment, but the fact is that no one trusts the Minister's judgment. The Minister has a track record and, because of that record, it is not difficult to understand why no one trusts his judgment. He is the Minister who received a letter from the Boston Conservative club which alerted him to the case of Land Travel, a travel company whose director failed illegally to file the books. The company ran at a £2 million loss, its auditors heavily qualified the accounts and the director had previously run a travel company which went bust. The Minister failed to take appropriate action and one year later the company went bust, leaving 40,000 people without their holidays and their money. Tonight he asks us to accept his assurances but not those of ABTA, the Consumers Association, LACOTS or trading standards officers.
Under these regulations the bonds will be worthless in many cases. In spite of calls from ABTA and others for a licensing scheme, the Government refuse to license any travel companies. For non-ABTA members licensing is the best way to ensure that a bond is not worthless, but the Government refuse to license, in spite of being told that that is the only way of guaranteeing protection to consumers. ABTA, the trade body whose members provide 90 per cent. of holidays, already requires bonding and polices vigorously its own scheme. However, more than 1 million people travel with non-ABTA companies. From 1 January Arthur Daley companies will simply sign a certificate claiming to be bonded, but no one will be checking them. As the Minister knows, local government trading standards officers cannot undertake that work.
So much for bonding. Let us look at other flies in this unsavoury ointment. There are several other flaws which disadvantage consumers. The Minister is prepared. as he has admitted, to allow surcharges to continue. I have never understood why, when a holiday is paid for in advance, the holidaymakers' payments should be given to the airline, bus company, hotel, or other suppliers of services at the

price agreed, and that when payment is made they can have that payment revised and additional demands made on them. In some circumstances, some of these surcharges amount to little short of extortion.
Now the Government are proposing even weaker controls on surcharging than ABTA imposes on its members. The current ABTA scheme permits surcharges in some cases, but only after the company has absorbed 2 per cent. and only after every component of the cost increase has been written down and vetted by ABTA's inspectors.

Mr. Malcolm Bruce: Does the hon. Member not also think that it should be borne in mind that in many cases companies that buy forward make excess profits from currency speculation and use of the money from the people who have paid for those holidays and in no circumstances and on no occasions is that excess profit shared with the customers?

Mr. Griffiths: That is indeed the case and in 1988 I understand that 5 million holidaymakers in this country had their holidays subject to surcharge. It is important to realise that the Minister has ignored that in framing the regulations. He is permitting the trade to levy a surcharge on the basis of self-certifying that the rise has been properly incurred and that gives yet another opportunity to the unscrupulous trader to make a killing at the consumer's expense. I am reminded by that helpful interjection that it is also the case that when money is taken from cutomers in advance, often thousands of pounds a year in advance, no interest is paid on that and the travel agent and tour operator are able to make a profit on the interest. That has not been addressed at all by the Minister.
When Holiday Which? conducted its last survey in 1991 it highlighted two further key complaints that the regulations fail to address properly—the cancellation and consolidation of holidays. According to Holiday Which?, one in five consumers last year had their holiday arrangements changed by companies after the booking was made. The Government intend to see that continue.
Do the Government and the Minister think it fair that in the 1990s a family booking their annual holiday and paying in full and in advance should have it cancelled because the company has got its sums wrong? That is what he is permitting. Regulation 13 will allow travel companies unilaterally to cancel holidays without compensating, giving the excuse that the holiday was under-subscribed. In effect, the Minister is allowing companies to hold money for months on end, pocket the interest and, at the end of the day, cancel the holiday. It cannot be right that people's holiday plans should be ruined without their getting a penny in compensation.
Can it be fair that the present high incidence of changing flight times and airports is allowed to continue? Hon. Members will know the stress that is caused to people when they have their flights switched from 7 am to 7 pm, not because of any unforeseen circumstances but, again, because the company has got its figures wrong. The last-minute nature of this legislation includes a new requirement on travel companies retrospectively to seek bonding for holidays that have already been booked and paid for, but the trade was told of that only in the past week or so. There is a fear that many smaller companies may falsify their bonds in desperation to comply with the


new regulations. However, the Government would not listen to me when I urged them to warn the trade in advance that all holidays booked this year for 1993 will have to comply with the new regulations. The Government show just how out of touch they are with the needs of business. There are further problems arising with people who make up their own packages and ask travel agents to book them. The Government have given no guarantee at all that people travelling hundreds of miles within the United Kingdom on package holidays from Shetland to Land's End will be taken home at no extra expense if the company they use collapses.
With 21 days to go before the regulations become law, let me remind the Minister that ABTA says:
The association is of the view that the following areas remain inadequately addressed by the Government in spite of strong industry representations.
It lists financial protection, then surcharges and then tailor-made travel arrangements, organisers' liability insurance and telephone bookings.
In summary, Labour is raising tonight a number of grave concerns: the need to license all non-ABTA travel agents and tour operators to give protection from fraud. We need to tackle consolidation. For too long, customers have seen their travel arrangements changed late in the day and at considerable inconvenience, forcing them to hang around airports for hours. Compensation for cancellations has not been considered and that is wrong. Surcharges have not been properly addressed. The way the Government have handled this measure is deplorable. They are achieving none of the three objectives that the Minister outlined at the beginning of his speech. The Government have lost any respect they had in the travel business and any friends they had among consumers. They will bring in weaker consumer rights than ABTA provides, ineffective policing and chaos in the travel trade.
Sadly, it is now too late for the Government to listen to those who know better. The victims of that arrogance and incompetence are the holidaymakers who continue to be duped by unscrupulous travel operators. This was the chance to put those operators out of business. What a pity that such an opportunity has been missed.

Sir Anthony Grant: I shall not follow the somewhat political polemic of the hon. Member for Edinburgh, South (Mr. Griffiths). Nevertheless, I have a serious criticism of the regulations.
I was interested to hear my right hon. Friend the Member for Worthing (Mr. Higgins) tell the Economic Secretary to the Treasury in our earlier debate that the House was discussing an affirmative resolution so it was not possible to amend it. The same seems to apply to the measure before us, but I should be interested to know whether the Parliamentary Under-Secretary of State for Technology will say to me what the Economic Secretary to the Treasury said to my right hon. Friend—that although the regulation cannot be amended there are certain curious ways of implementing it.
I must declare an interest in that for many years I have had the honour of being an adviser to the Guild of Business Travel Agents—a body consisting of about 40 of the largest business travel agents in the country, responsible between them for nearly £3.5 billion in

turnover and for four out of every five business flights to and from the United Kingdom. Those companies employ more than 17,000 people.

Mr. Nigel Griffiths: Will the hon. Gentleman tell the House how much he is paid for that service?

Sir Anthony Grant: Not nearly enough.
In the light of the Single European Act, the Guild of Business Travel Agents took the initiative of forming the Guild of European Business Travel Agents. About eight countries are involved. Perhaps the Minister will tell us when he winds up whether those other countries are implementing the directive properly and enforcing it.
I emphasise that the guild is distinct from ABTA. I know that my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) will talk about some of the problems involved if he manages to catch your eye, Mr. Deputy Speaker, and in discussions with him I have found that I entirely share his views on the matter. I shall therefore confine my remarks to business travel.
The subject was last discussed in the House on 18 December 1989. I pointed out then that as a trading nation this country essentially depends on exports, so it is vital that we be able to move our business men around the world speedily and economically. That is more important now than ever. Yet the regulations will do nothing but harm to the business travel industry; in fact, they are not strictly relevant to it.
For example, regulation 16 deals with:
sufficient evidence of security for the refund of money paid over and for the repatriation of the consumer in the event of insolvency.
That is sensible in the case of poor Mrs. Snooks who is stranded somewhere in the Mediterranean. It is vital that she be recompensed and repatriated. But business travel involves people such as ICI employees moving all round the world. Such companies pay the travel agent in arrears anyway. They can repatriate their staff without any difficulty, and they do so.
Much business travel involves incentive travel. Large companies such as ICI and Ford like to send their salesmen and other people abroad for incentive purposes. They instruct a large business travel agent to arrange the trip, but that agent will have nothing to do with the internal organisation, which is arranged by the large company.
The best protection for corporate clients, who are the bulk of the clients of business travel agents, is vigorous competition. During the debate in December 1989 that point of view was well understood by my hon. Friend the present Parliamentary Under-Secretary of State for Schools, who was then the Minister responsible. He made his view clear:
It is true that business travel was never intended to be part of the directive",
and said that he intended that
the final text of the directive—will have attached to it a minute statement
to the effect that the directive would not cover
'business trips which involve separate bookings of transport and hotel accommodation which do not constitute elements of a pre-arranged package, even though they are invoiced simultaneously'
That is Community jargon for saying, broadly speaking, that business travel will not be within the directive's scope. I hope that that gives my hon. Friend the assurance that he seeks."—[Official Report, 18 December 1989; Vol. 164, c. 166–67.]
It was—but alas, those hopes were dashed because, due to a curious quirk of Community law, the European Court ruled that such a minute was ineffective to alter a directive. So the whole purpose was thereby frustrated and defeated.
Following the ruling, I had meetings with the Minister and with his officials. We sought vigorously to find a solution, which everyone desired, which would exclude business travel from all the burdens. Unfortunately, none was discovered. We heard nothing further of the results of all the thinking which I assume went on among officials not only in the Department of Trade and Industry but in the Department of Transport. We were never told whether they had come to any conclusion or whether solutions could be found. That caused great uncertainty. It is ridiculous that all the regulations, important though no doubt they are, should apply to business travel. The only effect will be to pass costs on while not providing anything relevant to the vast bulk of business travel.
One solution which I know was mulled over was that a way out would be to decide whether the business travel was allowable for tax purposes. That would be a suitable definition and a way to exclude such travel from the regulation, but we never heard from the Government whether that was workable or not.
Unless the Minister, under this procedure, can express some hope for the business travel industry, I shall continue to believe that the directive is bad for the industry, bad for business travel, bad for exports and therefore bad for Britain.

Mr. Alan Milburn: The hon. Member for Cambridgeshire, South-West (Sir A. Grant) could have added that the directive will be bad for consumers and not only for business travellers. This debate takes place against a background of increasing concern about the state of the travel industry, culminating in the Land Travel affair. That concern arises not only from the industry, which is welcome, but from consumers' organisations, from individual consumers and from enforcement officers.
Recent collapses, most notably the collapse of Land Travel, have prompted some serious questions about the current inadequacies in the regulatory framework for the travel industry. Over the past few minutes, the debate has been dominated by the concerns of business travellers. The hon. Member for Cambridgeshire, South-West is no doubt right to say that there are serious concerns in that regard.
It is as well to remember that the holiday industry also touches the vast majority of members of the public. Every year, millions of people pay large sums, usually in advance, for their annual holidays. Many of them pay not just throughout the year, but for many years, to be able to afford the largest chunk of consumer expenditure undertaken annually. The holiday industry is very important.
Does the regulatory framework adopted by the Department of Trade and Industry deal with the consensus of concern that we have heard from the Association of British Travel Agents, from the Consumers Association, from my hon. Friend the Member for Edinburgh, South (Mr. Griffiths), from individual consumers, from the Liberal Democrats and from others? The answer is that it probably does not. The proposals are both too little and too late to deal with the majority of consumers' concerns.
I shall illustrate those rather sweeping remarks by the example of the recent collapse of a travel company in my constituency—Scotts Greys Travel Ltd. The Minister may be acquainted with the case because I recently wrote to the President of the Board of Trade about it. Scotts Greys was a well-established, Darlington-based company which had been trading for many years. It provided travel arrangements within Britain and abroad. The company collapsed in September, leaving many hundreds of holiday makers in Darlington and in the north-east not only short of an annual holiday, but desperately out of pocket to boot.
I have been collecting some information about the sort of grievances that some of my constituents have about Scotts Greys. To date, I have been contacted by 218 people in and around Darlington who have lost out to the tune of £24,335—more than £100 per head—as a result of the company's collapse. Not a penny has been forthcoming in compensation, for reasons to which I shall allude in a moment.
I will give the House some examples of the innocent victims of that collapse. Morag Williamson, who is running a campaign to ensure that compensation is paid to the victims, is herself a victim. She had arranged for a party of seven people to visit EuroDisney in Paris. She paid out well over £1,000. To date, Morag Williamson has seen neither EuroDisney nor a penny of her deposit back.
Mrs. Grey, who is 81, has not had a holiday since her husband died eight years ago. She stands in marked contrast, perhaps, to some of the ICI executives to whom the hon. Member for Cambridgeshire, South-West paid so much attention in his speech. She arranged to take her sister, aged 85, to Blackpool. She paid a deposit of £28—perhaps not a large sum to hon. Members but a very large sum to an old-age pensioner with no other income. Mrs. Grey lost both her £28 and her holiday.
For more than 12 years, Mrs. Denny regularly organised party bookings through Scotts Greys for her family, friends and work mates. She booked a holiday for a party of 26 people who, for many months, had been saving £10 a month for their trip to Belgium. Mrs. Denny paid out £900 the week before the company closed its doors to the public, and had the difficult task of informing her 25 friends that their holiday would not be happening.
Those people are the innocent victims of the collapse of what appeared to be a well-established, credible local travel operator with a solid reputation. The company was not ABTA bonded, but it was a member of the Bus and Coach Council. As hon. Members may realise, the BCC operates a very good bonded scheme. Scotts Greys took advantage of its membership of the BCC, displaying the council's logo prominently on its letterhead and claiming its membership in advertising material. The company never once pointed out, however, that it was not a member of the BCC bonded scheme.
I repeat that, to the majority of holidaymakers, the company appeared to be a reassuringly credible, well-established local operator. In fact, Scotts Greys resigned its membership of the BCC in July. Needless to say, it did not bother to tell any of its customers of that fact. No one—least of all the holidaymakers—knew that it had resigned.
That was only one of a series of warning signs in connection with the company's standing. In fact, far from being a credible, financially secure and reputable company, it was in deep financial trouble. All the evidence


was there. The problem was that no one bothered to look—indeed, that no one was empowered to look—for that evidence, even though it was staring people in the face.
I will give some of that evidence. My research has revealed that Scotts Greys consistently filed late accounts with Companies house. Hon. Members will know that every company has a duty to file accounts with Companies house within 10 months of the end of its financial year. The end of Scotts Greys' financial year coincided with the end of the calendar year, 31 December. Yet over the past six years not once did Scotts Greys manage to get its returns into Companies house on time. It filed eight, nine, three, three and three months late. Remarkably, in 1990, its performance improved and its returns were only eight days late.
However, the last set of accounts contained a clear health warning from the company's auditors who said that the financial statements had been drawn up on a going concern basis on the assumption that the company would continue to receive the support of its bankers and other group members.
Those right hon. and hon. Members who know a great deal more about accountancy than I do will realise that that was a serious health warning that the company was not a going concern and was in deep financial trouble. That was not surprising because during the previous 12 to 24 months the company had been disinvesting from its bus and coach fleet. It had been flogging off its assets. The December 1990 accounts showed that the company, rather like Land Travel, had rather more liabilities than assets.
In addition, there was a final health warning that no one bothered to spot. In 1987, Scotts Greys took advantage of sections 247 and 248 of the Companies Act 1985 which allow small companies to file only the most rudimentary set of accounts. An unscrupulous company, such as Scotts Greys, is thus able to hide its financial dealings and financial ill health.
Hon. Members will agree that there were any number of warning signs of Scotts Greys' vulnerability. Yet no one in Companies house even raised an eyebrow. Certainly no Minister or civil servant at the Department of Trade and Industry bothered to heed any of the warning signs which were clear to so many people. As a consequence, hundreds of people, not just in Darlington but throughout the north-east, lost their holidays and a great deal of money to boot.
I have asked the President of the Board of Trade to conduct an investigation into this shambolic affair and, in particular, into the role of Companies house and his Department. It is not the first time that the right hon. Gentleman has been asked to conduct such an investigation. I hope that the victims of the Scotts Greys fiasco receive a better response than the victims of the Land Travel fiasco. The two have certain similarities.
I have also asked the President of the Board of Trade to consider reviewing the Companies Act 1985. It is wrong that a company, purely on the basis of its size, can get away with filing only the most basic of financial information. Surely a consumer safeguard should be built into the Act to ensure that the companies trading with many members of the public as travel operators do should have to file fuller financial information than the Act requires.
Quite simply, the Department of Trade and Industry and Companies house are culpable, but none of that helps any of my constituents who, frankly, were fleeced by a company which was still taking money and bookings on the day it closed its doors to the public in Darlington. The company directors knew that it was going down the tubes. They had known it for months, possibly years, yet they unscrupulously filched from members of the public in the north-east and were allowed to get away with it.
The Scotts Greys affair proves the need for regulation and for more effective and regular monitoring of the travel industry before a problem arises. The major problem with this measure is that it does not allow that. It will allow problems to be spotted once they have risen and once holidays and money have been lost, but not before.
The regulatory framework is inadequate and the proposal will create a great deal of confusion in the public mind about whether a company is bonded, has insurance or is financially viable. The proposal allows too much room for the cowboys in the industry. Thankfully they are a small minority, but they can have a devastating effect on so many members of the public. The measure will allow the cowboys to bypass a system which remains so lax that it amounts to licensed theft.
My hon. Friend the Member for Edinburgh, South alluded to the role of trading standards officers. I have here a letter from one officer, who says that, although they would like to be able to police the measure, they are under-resourced as there are 10 per cent. too few of them. However able or willing trading standards officers are, and however much expertise they have, they will be unable to monitor and police the system because the resources are not being made available for them to do so.
In some ways, other proposals that the Minister and the Department are producing will only make matters worse. I understand that one proposal will allow even more small companies to file only the most basic financial information. Once again, more loopholes are being created which will ensure that proper regulation of the travel industry is not implemented. I am afraid that the result will be that yet more people will lose out.

Mr. Richard Page: May I declare an interest, as I am a parliamentary adviser to the Association of British Travel Agents. In that capacity I have witnessed numerous discussions and debates during the past three years, as the Department of Trade and Industry has laboured to translate the aims of the directive into workable legislation.
I disagree with the comments on consultation made by the hon. Member for Edinburgh, South (Mr. Griffiths), who led for the Opposition. Through the Minister, I should like to express my appreciation for the detailed way in which the travel industry and ABTA were consulted by Department officials when producing the legislation. Not everyone has got what they want, and everything has certainly not been translated into this regulation. The case for a full and statutory licensing authority has been argued, but the cost of setting up such a body seems to have been conveniently forgotten. I understand the Government's natural reluctance in that matter, and I wonder how much of the cost would be translated into a cost on each holiday if it ever came to pass.
There is no doubt that, despite the remarks of the hon. Member for Darlington (Mr. Milburn), the directive will provide an overall increase in protection for holidaymakers not already covered by booking through certain of the trade associations. Even so, some holidaymakers face loopholes through which they might still fall.
It has correctly been said that many variables exist in relation to repatriation. I shall speak primarily about the costs and mechanisms of repatriation in the event of tour operator failure. That is made more important these days by the growing trend of long-haul holidays. No longer is it a question of dragging back a coachload of lager louts from Spain. We could easily be faced with a plane load of Himalayan hikers as a problem to resolve.
We must feel concerned lest, when a tour operator fails, insurance policies do not provide a 24-hour repatriation service. It is not enough to require a client to finance his own repatriation, with only the prospect of possible reimbursement on his return. Many clients will not have sufficient funds and others will not have the knowledge of travel procedures to repatriate themselves. I should like to go into the matter in detail, but, because several hon. Members wish to take part in the debate, I shall truncate my remarks.
I come to telephone bookings and the serious problem of late bookings. The regulations place an obligation on organisers and retailers to give the consumer information before a contract is made and about the communication of the contract. The consequences of failure to comply are criminal in regard to regulation 7 and civil in regard to regulation 9.
The Minister will be aware that a vast amount of business is transacted by telephone, particularly in the travel industry. Indeed, some companies in the industry reckon that they do 90 per cent. of their business that way. That especially applies to business travel, and my hon. Friend the Member for Cambridgeshire, South-West (Sir A. Grant) raised an important point when he spoke of the possibility of the business traveller being caught by the directive. As we know, it was not the original intention to bring business travellers into the net.
The Minister will appreciate that it will be difficult to comply with the directive in relation to late bookings. Will he give guidance on the period within which contractual details under regulation 9 need not be communicated in full before the contract is made where, for example, the booking is made very close to departure? Perhaps I might open the bidding by suggesting 14 days. Clarity, as ever, is vital to the industry and the consumer.
I also am concerned, because it affects the whole business community, about the principle that anyone trading—I am thinking particularly, in connection with the directive, of those who are organizing—should be responsible for the services that are sold. Such an imposition of liability can be effective only if there is a legal requirement for organisers to insure themselves against liability. Under its code of conduct, ABTA now requires all its members to carry that liability insurance.
Consider what might happen if an organiser is not obliged to take out insurance and does not do so. For example, if somebody went on holiday and had a serious injury, he would be left without a remedy if the organiser failed. I have raised that issue previously. I hope that avenues can be explored to see whether, at a later stage, the problem can he resolved, not only for the travel industry but for trading generally.
I shall not respond to the point made by the hon. Member for Edinburgh, South, who got much of the matter completely and utterly wrong, but shall simply ask for clarification. Will VAT increases be encompassed within regulation 11 so that, if the organiser wishes, he can pass on those increases?

Mr. Nigel Griffiths: I invite the hon. Gentleman to give two or three examples of what was wrong.

Mr. Page: With respect to the hon. Gentleman, several other hon. Members wish to participate in the debate and time is squeezing on. I am prepared to give the hon. Gentleman an education in the travel industry later.
Surprisingly, I agree with the hon. Gentleman about the fact that an increase in the duties of trading standards officers in policing that directive will be considerable. I hope that they will be equal to the task. Hotels that provide activities will be brought into the scope of the directive. The size and volume of the task has not been adequately appreciated.
People are apprehensive that the monitoring will. of practical necessity, be difficult. Some in the travel industry may not willingly comply, to the consumer's disadvantage. It may be necessary, at a later stage in the light of experience, to tighten up the monitoring of those travel agents and tour operators who are not covered by those other organisations.
I realise that I have presented my comments in a staccato fashion, having distilled them from representations and views put to me by those in the travel industry. I hope that my hon. Friend the Minister will be able to respond in the short time left for his reply. I conclude on the same note on which I started, by paying tribute to those who have put so much effort into translating the directive's theory into operational practice.

Mr. Malcolm Bruce: As the debate is short, I shall speak essentially about surcharges but shall raise a couple of other points at the outset.
The position of Land Travel has already been mentioned, but it is pertinent that the House should know that my hon. Friend the Member for Liverpool, Mossley Hill (Mr. Alton) received today a letter from the Prime Minister. It says that not only was Companies house aware that the company was trading at£2.1 million adrift in terms of liabilities in relation to assets, but that Ministers were also aware of it and initially denied it. The letter confirms that Ministers were alerted to the problem by the hon. Member for Holland with Boston (Sir R. Body) but nevertheless took no action. That is a sad indictment of the Government's competence in failing to protect consumers.
I have no doubt that there has been sustained and active consultation between the Department and ABTA, but it is important that Ministers understand that dealing with trade associations does not always mean that every corner of the trade is reached. For instance, my hon. Friend the Member for Orkney and Shetland (Mr. Wallace) has received correspondence from a company in his constituency, Shalder Coaches, which said that it learned of the regulations' implications late in the day and will have considerable difficulty in complying with them. It feels that, too often, Ministers concern themselves with


ensuring that the big operators know what is going on, while the small operators are left to struggle to catch up in due course.
The public are greatly concerned about surcharges. Consumers view the practice with hostility and suspicion with good reason, because many of them have suffered what they can only describe as a "rip off" in the past. It is worth pointing out that companies can impose surcharges up to 30 days before departure. The fact that we are getting a 30-day ruling, as opposed to the 20-day ruling in the directive, is a small gesture, considering that we are legalising surcharges. I believe that the directive provided the opportunity to abolish surcharges.
If, by countenance, the consumer wishes to cancel, the penalties imposed on him or her are much more disadvantageous than those that the companies impose on themselves. It is true that in the past few years the issue of surcharges has not been topical, but it will certainly be topical in the coming months.
In the past few weeks, Conservative Members, at least from certain quarters, have been happy to trumpet the great choice of leaving the exchange rate mechanism and the freedom for the pound to float. Consumers will not always be entirely happy with the consequences of the floating of the pound because it will reintroduce perforce the surcharges that the directive will legalise. The simple question is: why on earth should we allow a trade to have such a legal benefit? What is the conceivable justification? I do not think that the Minister has made any case that I regard as sustainable, credible or justifiable. There are few other business sectors that would have the audacity to ask for a legal benefit, or expect it. Terms of trade are terms of trade.
It is a very uneven contract between consumers, who have virtually no bargaining power, and large tour operators, who hold virtually all the trump cards. So that I am not misunderstood, it is right to say that millions of people in the United Kingdom take package holidays and in most cases such holidays offer good organisation and value for money. However, problems arise when things go wrong, and at that point the law must enter the fray and defend the interests of consumers.
Tour operators get money many months in advance. Large operators almost universally buy forward. Therefore, they avoid the risk of losing money as a result of changes in fuel prices or exchange rates. They use the money that they can get their hands on in time. They buy competitively, and they can get good results. They can also benefit from accumulated interest from the use of their customers' money and playing successfully on the foreign exchange markets.
The Minister is saying that those companies, having completely covered themselves against the losses, can nevertheless come within 30 days of departure and say, "Oh dear! The exchange rate has gone in the wrong direction and fuel charges have gone in the wrong direction. The fact that they have not affected our company one iota is irrelevant; we will surcharge you." That is a complete and absolute rip off. Tour companies make an excess profit for which no risk has been taken and no effort expended, and consumers should not be expected to pay for it.
When the boot is on the other foot and companies make substantial benefits when fuel charges fall, as they have done in the past, and when exchange rates move favourably, as they have done in the past, there is no obligation whatever to reduce the price of the holiday 30 days before departure and, indeed, give the consumer the benefit of a windfall spending money to take with him. It is an uneven contract. Frankly, I am appalled that Government Ministers have proposed to enshrine that as a legal justification for a trade. That trade may well have an established practice, but we should not be extending it; we should be stamping it out.
The matter of the 2 per cent. absorption is marginal. A much more effective constraint to prevent companies from introducing surcharges gratuitously would be to allow an absolutely unconditional right of cancellation at any time that the surcharge is being imposed, with full compensation. In such circumstances, it would certainly concentrate the minds of those who run travel companies who would be unwilling to lose the risk of total business for the sake of 3, 4 or 5 per cent., especially when they had not incurred the loss. I know that Conservative Members will say that there will be enforcement provisions. However, it has already been said that it is not possible to enforce such provisions. It is not possible to investigate the detailed mix of surcharges that are being sustained by any one company. It will simply be an excuse for excess profiteering at the expense of consumers.
It was stated in the House of Lords report that in 1988 companies imposed fuel surcharges of up to 20 per cent. In the case of a 737 aircraft, the extra cost was calculated at £2.85 per customer on the price of the package holiday. That is surely an amount which any tour operator could absorb. Indeed, Holiday Which? stated that the amount of money paid over in surcharges was the equivalent of the Brink's-Mat bullion robbery. Robbery is exactly what it was, particularly because fuel charges fell, yet surcharges were still imposed.
A practice has recently developed of introducing second and third brochures with revised prices. Surely that is the way for the industry to move forward. If operators want to say that their prices have increased, those who contract later in the year can pay the higher price. But the price that people contract when they buy their holiday should not be alterable.
To raise a constituency point. holidaymakers from the north of Scotland who go on package tours are effectively surcharged before they start because of the point at which they start. If they face surcharges, for example, as a result of currency changes, the charge is usually a percentage of the holiday price. A substantial part of the higher holiday price for leaving from Scotland is for flying costs across the United Kingdom and is nothing whatever to do with the exchange rate. So a percentage is not valid. There should be an absolute charge which relates to the real extra cost of the holiday. I do not see why people who live in the north of Scotland should pay more than people in London when the cost to the holiday operator is exactly the same. That point has not been addressed.
The Minister could argue that the absence of surcharges could lead to higher costs. I suggest that that is not true. It would certainly not be true in a highly competitive market in which some of the conditions that I have suggested applied. Operators would know that if they


passed on surcharges that were not justified, other operators might not do so and they could lose business, especially if unconditional cancellation were allowed.
Even if there was a marginal increase in price to take account of the insurance provision, most consumers would probably prefer that. They would then know exactly what they had paid and could budget for it. They would prefer that to knowing that they could face an extra £20, £30 or £40 per holiday 30 days before they departed-an arrangement which is unjustifiable.
The debate is entitled on the Order Paper "Consumer protection". The regulations are the exact opposite. They are protection of the industry. They give operators the right to rip off consumers and make profits that they have not earned and to which they are not entitled. I urge the Government to think again. This summer surcharges will be imposed and complaints against the industry will increase. The Government will be responsible for failing to take action to protect the consumer in ways that the consumer would expect the Government to act. I assure all hon. Members that they will feel it in their post bags next year.

Mr. Robert Banks: In a debate of one and a half hours, the Chair should have some discretion to limit the length of speeches so that those Members who wish to make a speech are able to do so.
I welcome this measure to harmonise package holiday legislation within the European Community. I hope that my hon. Friend the Minister will explain exactly what other countries are doing to bring themselves into line with the measure, which is important. Everyone realises the significance of giving the consumer protection from companies that go bankrupt and leave them stranded on their holiday or with a lost deposit. The Association of British Travel Agents has done a good job historically in bringing to the notice of the public the consumer protection that it offers. It has been one of the pioneers in the business. I applaud it for that.
I hope that Britain's lead in Europe was significant in framing the directive. I do not entirely agree with all aspects of it, but it is important that we take measures to protect the consumer. I regret that the industry has not given greater support to the directive and that a way has not been found to obtain its support.
The important consideration is whether the measure will deliver the goods. I have a feeling that it will, but it may not be so good as some of the alternatives that were suggested by the industry, such as universal licensing and its own monitoring and bonding arrangements. That would be a good arrangement, but the costs would have to be examined carefully. I gather that the Government feel that consumers would find the cost difficult to bear.
I am disappointed by the exclusion of package holidays within the United Kingdom. Many people take short-break holidays that cover travel and hotel accommodation, and I see no reason why they should not be protected automatically in exactly the same way as those who are travelling only 20 miles or so across the channel to France.
Obviously, some people make bookings by telephone. One of the strictures of the directive is that failure to provide the person taking the order with the necessary information about the terms on which he is agreeing to the

holiday would constitute a criminal offence. I hope that some common sense can be brought into that. If someone picks up a telephone and makes a fairly short-notice booking with a tour operator, it is inevitable that he cannot provide all the necessary details before the booking is finalised.
I think it perfectly fair for surcharges to be made, given the possibility of unusual developments. Everybody recognises that oil prices can go roaring up, for instance. Under the directive, the company has to bear the first 2 per cent. of increased costs before it can impose a surcharge, which I consider a fair arrangement. VAT can go up by 5 per cent., which could have a significant effect on some bookings.
We are on the threshold of the industry's new year marketing effort. Many of the brochures will have been printed for the 1993 winter holidays, and the summer holidays that will follow; but they will not contain information that it is important for them to contain. I hope that the Minister will appreciate the difficulties that the industry will experience in complying with the regulations when it has already printed brochures but has not made them available to the public. I hope that he will turn a Nelsonian blind eye to any proceedings that may result!

Mr. John Denham: It is noteworthy that every speaker has been critical of the Government's position, although the Government have had three years to work on it. I am not about to buck that trend.
A number of references have been made to the collapse of Land Travel, the Bath-based company which cost 40,000 people their holidays last summer. Had I more time, I would refer to some of the several hundred of my constituents who have written to me from the south Hampshire area about Land Travel. In any case, the factors involved in its going bust are very clear. It was obvious to many people that it was going under. It was obvious to Price Waterhouse, the auditors, and the state of the company was drawn to the attention of Ministers by Conservative Members of Parliament and local Conservative clubs. Despite that, the company continued to trade. It took money from one of my constituents in April this year and it took more money in June and July, only to deprive that constituent of a holiday in August.
Will this measure leave our constituents any better protected? Will it lead to better protection for one of my constituents who lost £275 on a trip to EuroDisney? She is unemployed and her husband has occasional casual work from an agency. They have lost their first holiday in six years. They are typical of the 40,000 people who lost their holidays through the collapse of Land Travel. Unscrupulous companies target their business on those least able to pay—people who, because they are most vulnerable, need most protection.
The regulations amount to a system of self-policing, which will not be followed by companies such as Land Travel. The absence of a licensing requirement means that such companies will continue to exploit loopholes until they are caught, and people such as my constituents and those of other hon. Members will suffer.
It is desperately sad that, despite having so long to prepare the legislation, the Government have failed


abysmally to protect our constituents. We are told that the obstacle is cost. What estimate have the Government made of the cost of licensing? I suspect that constituents who lost £275 or £500 would have accepted a slightly higher cost if they could have kept their holiday.

Mr. Leigh: I am grateful to those hon. Members who have participated in the debate. Others such as my hon. Friend the Member for Isle of Wight (Mr. Field), who came to see me about the regulations, wished to participate but could not do so.
I inform my hon. Friends the Members for Harrogate (Mr. Banks) and for Cambridgeshire, South-West (Sir A. Grant) that under Community law all member states are required to implement the provisions of the directive and must notify the Commission of measures adopted to do so. If a member state fails to implement, infraction proceedings may be taken. We shall keep a close eye on such matters.
In a character istically forthright speech, the hon. Member for Edinburgh, South (Mr. Griffiths) accused us of minimum consultation. My hon. Friends have shown that that is not true. In July 1991, we consulted all ABTA members and members of other trade bodies, consumer groups and other interested parties, including operators who do not belong to trade associations. That meets the point made by the hon. Member for Gordon (Mr. Bruce).
The main thrust of the attack of the hon. Member for Edinburgh, South was why we were not licensing operators. I can only repeat the point that I made earlier: the number of operators who would fall within the scope of the regulations would be significant. Many of the operators would be small and the unit cost of issuing each licence would be high, disregarding the costs of providing protection for repayments. That point was emphasised by my hon. Friend the Member for Hertfordshire, South-West (Mr. Page), and we acknowledge the expertise that he brings to these matters. At best, such a licensing procedure would increase cost to consumers; at worst, it would potentially drive small operators from the market and reduce consumer choice.
Any licensing system would have to be paid for by the licensees; there can be no question of any Government money. We believe that more than 20,000 operators would need to be licensed, and the number could be even higher. It would be a massive, frighteningly expensive operation.

Mr. Nigel Griffiths: How much does the Minister estimate that licensing would cost?

Mr. Leigh: I have just said that there is no direct evidence of the number of operators, but there could be between 10,000 and 20,000. Any licensing system would have to be paid for by those operators. Many of them are small operators, and the costs would fall on them and ultimately on the consumer. It is impossible for a Minister to say how much it would cost, but if one accepts that there are more than 20,000 operators the cost would be high and it would fall on small operators.
We acknowledge the expertise of my hon. Friend the Member for Cambridgeshire, South-West in relation to business travel and the contribution that business travel makes to the economy. Unfortunately, we cannot exempt

packages which satisfy the definition given in the directive. We must carry out the directive. Many arrangements made by business men are not pre-arranged and offered for sale or sold at an exclusive price, so they would not fall within the scope of the regulations.
I will mention one point to my hon. Friend which I hope that he will welcome. The incentive travel industry was particularly concerned about absorption of the first 2 per cent. of any surcharge. As a result of the representations made to us by my hon. Friend and others, we have now modified this regulation so that it is only individual consumers, and not corporate consumers, who will benefit from this provision. I hope that this meets some of the objections and concerns of my hon. Friend.
Another major thrust of the case put forward by the Opposition was a point made particularly by the hon. Members for Edinburgh, South and for Gordon. My hon. Friend the Member for Harrogate dealt in his speech with the problem of surcharges, but I have to reiterate the great difficulties that anybody seeking to prohibit surcharges would be under.
When prices increase, tour operators can cut into their profit margins, take some form of insurance, or impose a surcharge. I accept that from the consumer's point of view the first is to be preferred, but I hope that the hon. Member for Gordon will accept that that may not always be possible. He recognised that the package travel industry is highly competitive and that costs are generally cut to the bone. A company's capacity to absorb a significant rise in prices which is outside its control is, therefore, likely to be limited.
The other routes also have their costs. Insurance would involve a certain cost, whether it was done by conventional insurance or by building a margin into the price at which the tour was sold. Many tour operators therefore prefer to keep their initial price as low as possible and to cross the bridge of increased cost when they come to it by reserving the right to impose a surcharge if need be. This seems to be a matter of legitimate commercial choice, so long as customers are made fully aware of the terms of the contract they are entering.
Regulation 11 places conditions on the circumstances in which an operator may surcharge, which is similar to the regulations which currently work well from the consumer's point of view.
I shall deal now with a point made by my hon. Friend the Member for Hertfordshire. South-West on telephone bookings. There is nothing in the directive to stop telephone selling, last-minute or otherwise, which is a point that he raised. Except where the booking is last-minute, the customer must be given the terms of the contract before the contract is concluded, and the terms must include those specified in schedule 2 of the regulations. Often, however, the information can be given to the customer via the organiser's brochure, which he will have in his possession.
Another point made by my hon. Friend the Member for Hertfordshire, South-West concerned repatriation. I agree with the comments that he made. We believe that the proper interpretation of this requirement of the directive is that repatriation arrangements should be made on the spot, not simply that the customer may reclaim the cost of repatriation after having made his own way home. The regulations mirror the wording of the directive. We have not defined in the regulations how the repatriation requirement is to he met because there are many ways in


which this could be done and we were anxious not to be over-prescriptive. Of course, failure to have proper arrangements for repatriation will he a criminal offence.
Some of my hon. Friends raised the question whether repatriation arrangements would be needed for domestic packages. The directive does not define what is meant by repatriation and our regulations have not attempted to do so. It is the view of the Government, however, that the repatriation requirement does not extend to domestic packages. I can reassure my hon. Friend the Member for Harrogate, however, that this directive and its implementing regulations apply to domestic packages. A requirement for repatriation within the United Kingdom could be extremely burdensome. A very large number of weekend breaks of which travel forms a part would be caught by the regulations. To require them all, however short the distance travelled, to provide a back-up would be bureaucratic and in most cases unnecessary.
Another point made by my hon. Friend the Member for Hertfordshire, South-West concerned compulsory liability insurance and why we have not made liability insurance compulsory for operators and retailers. We have given careful thought to what we know to be the strongly held view of much of the travel industry that liability insurance should be compulsory, but compulsory insurance would be an additional burden and, as such, undesirable on deregulation grounds. Whether to take out insurance will be a matter of commercial choice. Also, an enormous variety of organisations would he offering packages, many of them quite remote from the mainstream travel industry. It would be unreasonable to require them all to have liability insurance.
The hon. Member for Edinburgh, South and other hon. Members said that all travel agents should be bonded. We believe that if an agent takes money on his own behalf and not on behalf of an organiser, the regulations require him to have protection for any prepayments taken. If the agent puts together a package himself, he would become an organiser and would thus need to have protection in place like any other organiser.
This has been a difficult task for the Government. We have consulted widely, and I believe that it is a major measure of enormous importance to the consumer. We have had an excellent and fair-minded debate. Once again, the Government have shown that they are prepared to act for the consumer but not to load undue burdens on British business.

It being one and a half hours after the motion was entered upon, MR. DEPUTY SPEAKER put the Question, pursuant to Order [4 December].

Question agreed to.

Resolved,
That the draft Package Travel, Package Holidays and Package Tours Regulations 1992, which were laid before this House on 1st December, be approved.

ESTIMATES

MR. DEPUTY SPEAKER, pursuant to paragraph ( 5 ) of Standing Order No. 52 (Consideration of estimates), put the deferred Question on Estimates, 1993–94 (Vote on Account) (Class VII).

Question agreed to.

Resolved,
That a sum not exceeding £17,763,619,000 be granted to Her Majesty out of the Consolidated Fund, on account, for or towards defraying the charges for civil services, in Class VII, for the year ending on 31st March 1994, as set out in House of Commons Paper No. 232 of Session 1992–93.

ESTIMATES

MR. DEPUTY SPEAKER then put the Questions which he was directed to put at that hour, pursuant to paragraph ( 1) of Standing Order No. 53 (Questions on voting of estimates, &c.) and Order [1 December].

SUPPLEMENTARY ESTIMATES

Resolved,
That a further sum, not exceeding £4,384,141,000 be granted to Her Majesty out of the Consolidated Fund to complete or defray the charges for civil services for the year ending on 31st March 1993, as set out in House of Commons Paper No. 231 of Session 1992–93.

ESTIMATES 1993–94 (VOTE ON ACCOUNT)

Resolved, That a sum not exceeding £65,973,856,000 be granted to Her Majesty out of the Consolidated Fund, on account, for or towards defraying the charges for defence and civil services, in Classes Ito VI, VIII to XIX, X1X,A and XIX,B for the year ending on 31st March 1994, as set out in House of Commons papers Nos. 232, 233 and 234 of Session 1992–93.

Bill ordered to be brought in upon the foregoing Resolutions by the Chairman of Ways and Means, Mr. Chancellor of the Exchequer, Mr. Michael Portillo, Mr. Stephen Dorrell, Sir John Cope and Mr. Anthony Nelson.

CONSOLIDATED FUND BILL

Mr. Stephen Dorrell accordingly presented a Bill to apply certain sums out of the Consolidated Fund to the service of the years ending on 31st March 1993 and 1994: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 96.]

National Rivers Authority

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Nicholas Baker.]

Mr. David Evans: This debate is about my constituents who, at the hands of successive water authorities—especially the National Rivers Authority—have been humiliated by a disgraceful lack of concern or action to alleviate their genuine fear for their lives through flooding.
On 8 December I received a letter from Lord Crickhowell, the NRA chairman, which said:
I fully understand the anxieties of those who live in the area and their impatience to find a solution.
How long would the House and you, Mr. Deputy Speaker, think that my constituents should wait before they can be charged with impatience—one month, three months, six months, one year, two years, 10 years, 20 years, 30 years or 60 years? My constituents have been waiting for some action since 1928.
It is an old adage, but nevertheless true, that an Englishman's home is his castle. Furthermore, it is a saying which is fundamental to Conservative beliefs. As a Tory, I believe in the sanctity of property, and in property becoming an extension of an individual's personality. All my instincts tell me that it is property which gives an individual a stake in society. Those who have worked hard to buy their own property, or, indeed, those who rent it, have a right to expect that their households will be protected.
If a house is burgled, the public expect the people involved to be caught and punished. If riots break out and a mob threatens to attack a house, the occupants have a right to expect the powers that be to repel that attack. Yet in my constituency, there are law-abiding families who have lived for more than 60 years under repeated threat of attack, of having their homes damaged and their valued possessions destroyed, and their repeated requests for action to the relevant authorities have gone unheeded for 64 years. It is a disgrace, and totally intolerable.
This threat comes from our most insidious force, which is often not taken as seriously as it should be. One of our greatest natural assets has also become a home wrecker. I am talking about Britian's rivers. Flooding is not just property-destroying, it is soul-destroying. Years of saving, a lifetime of memories, can be swept away in a night's work. People therefore rightly look to the relevant authorities to offer protection.
Tragically, as the residents of Warrengate road in my constituency know to their cost, the National Rivers Authority and its predecessors have not attended to a problem that has been with them for 64 years. They have negated their duty and almost their honour.
Although the first serious flooding of Warrengate road took place in 1928, occurred again in 1936, and again in 1947, the position worsened dramatically in the early 1950s. I take hon. Members back to 1955, when "Rock Around the Clock" was the best-selling single in both America and Britain; Elvis was just 20; Attlee was still leader of the Labour party, and Winston Churchill was succeeded as Prime Minister by Anthony Eden. That was also the year in which the residents of Warrengate road yet again warned of the danger of flooding from the Mimmshall brook. Since then, this country has witnessed

11 general elections and had nine Prime Ministers, and still nothing has been done to alleviate the fears of my constituents.
While the tide of history has ebbed and flowed, the water authorities have allowed the houses on that street to be flooded twice—first in 1979 and then three months ago in the early hours of Wednesday 23 September—despite the fact that, almost every year since 1955, residents wrote in the clearest terms of the threat to their homes.
I shall quickly list them: January 1928, serious flooding; January 1936, serious flooding; March 1947, serious flooding; 1955; July 1958, flooding of the whole road; 1960, December 1965, 1975, 1977, 1978 and 1979, flooding to the road with flooding to 11 properties to a depth of 3ft, plus road flooding; 29 October 1987, flooding up to the doors of properties and road flooding to a depth of 3ft; 29 January 1988, flooding to the road to a depth of 3ft; 1990, flooding of the road to 3ft; 23 September 1992 flooding to 18 residential properties and four commercial properties to a depth of 4ft.
Up to 1979, while not violating the housing in the street, heavy flooding occurred, and the level of the brook rose dangerously high; but nothing was done. After 1979, in response to the first disaster, some widening and a little dredging took place, but residents warned that the steps taken were not adequate to deal with the problem. Their warnings were ignored even when, in 1989, the brook flooded to the doorsills of Warrengate road.
The flooding of the houses in 1979 was still regarded by the water authority as a once-in-50-years event, yet, as the residents repeatedly pointed out, the potential for flooding has increased rather than diminished. The surrounding area has been developed and urbanised, which has led to an enormous increase in the amount of surface water run-off which finds its way back into the brook. The development of the A 1 (M) has further added to the problem. Another disaster was just waiting to happen, and it did, in September this year.
When faced with the dangers of flooding, Noah spent 40 days and 40 nights building an ark. Confronted by the same problem, the National Rivers Authority finally, after 64 years, conducted a feasibility study. The study was begun in 1991 and has still not been made public. Even the NRA chairman, Lord Crickhowell, received a copy of its conclusions only last Friday. That is a classic case of too little, too late.
Reading the National Rivers Authority's literature, one would think that it was an organisation to rival the United Nations. Apparently, in the day it took up its duties,
it became the strongest environmental protection agency in Europe",
and it is invested
with extensive powers and responsibilities by Parliament".
More than half its manpower is involved in flood defence projects, and from its flood control rooms staff are supposed to keep a round-the-clock check on weather conditions and river levels. Staff interpret the information and give the emergency services early warning of possible flooding. Yet the authority ignored warnings dating back to 1928.
This is not the case of a watchdog with no teeth, but rather a case of a watchdog which has curled up and gone to sleep by the fire. Indeed, until this year's flooding, letters from the residents to Lord Crickhowell went unanswered,


or the answers were unacceptably delayed. Furthermore, the two-stage channel which was promised to alleviate the problem never materialised.
Let us return to September. It is 4 am, and the homes of old-age pensioners, some of whom fought in two world wars, are flooded. The Minister's grandfather would know what those people gave him and the nation, yet here they are at 4 am. They survived the German blitz, yet now the National Rivers Authority is putting their lives in danger. Young children are terrified, and there are rowing boats and fire engines everywhere, all because of the incompetence of the NRA. Families and old-age pensioners will spend this Christmas in bed-and-breakfast accommodation, and all because, after 60 years, the authority cannot solve the problem—I hope that Lord Crickhowell hears about that.
The right honourable Baron Crickhowell of Pont Esgob—that sounds like something that comes out of the water rather than someone who regulates water—wrote to me recently. The penultimate paragraph of his letter added insult to injury by saying:
I must, however, make it clear that it is a possibility that the study may be judged unacceptable on economic grounds to alleviate the flooding to only 16 properties.
I have news for Lord Crickhowell: one property is too many.
We are told that the scheme would cost £2 million. But think of the £1 billion stolen from the social security every year—or is it £2 billion? What about the new age travellers? Are we prepared to spend millions of pounds on them but not on my residents who fought in two world wars? Oh no, they are not considered worthy of having £2 million spent to look after their properties, which they have spent a lifetime buying and living in. It is a statement that fails to recognise the traumas suffered by the residents and it ignores the fact that they have been complaining since 1928.
Furthermore, the letter contained a number of factual inaccuracies, not surprisingly, which did nothing to inspire confidence in my constituents. Lord Crickhowell got the name of his own chief engineer wrong. For his benefit, I can tell him that his name is Brian Izzard. Lord Crickhowell also noted that arrangements were in hand by the Countryside Commission to have trash removed from the swallow holes. In fact, the countryside management service organised a band of volunteers to carry out clearing work in March 1991.
This case is a classic example of how a public authority has woefully failed in the execution of its duty. I am surprised by the tolerance exercised by my constituents. All they have ever wanted is for their homes to be protected from flooding, yet they have twice endured the disasters that they had predicted. On several occasions, they have held their breath and only by the grace of God have they escaped further flooding. If I were in their shoes, I would sue the water authority tomorrow. Let us get a writ out and let us get this Crickhowell man off his whatsit—

Mr. Deputy Speaker (Mr. Michael Morris): Order. The hon. Gentleman is not allowed to speak of Members of another place in such derogatory tones. Perhaps he would like to rephrase his remark.

Mr. Evans: I withdraw that remark, Mr. Deputy Speaker.
If successful, public authorities can be awarded charter marks, can we consider conferring official black marks on organisations such as the NRA that fail to deliver the services for which they are responsible? The NRA calls itself the guardian of the water environment. It is a pity that it has failed to carry out its duties to my constituents. It is a pity that the chairman and his officials chose to ignore my constituents' plea for something to be done to protect their lives in September and in future.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Nicholas Soames): I congratulate my hon. Friend the Member for Welwyn Hatfield North (Mr. Evans) on securing a debate on such a crucial matter in the interests of his constituents. He made a speech full of clarity and vigour, with all the force and candour for which he is rightly famed in the House. I fully understand that the question of flooding is of fundamental importance to him and to his constituents. I assure him that the Ministry of Agriculture, Fisheries and Food takes the issue very seriously. We have the deepest sympathy for those who have suffered damage, distress and inconvenience through the flooding.
My hon. Friend was right in his views about the sanctity of private property and about the importance that ordinary constituents—those whom we represent—rightly attach to it.
Flood defence is an important and sometimes controversial issue. In recent weeks, we have seen the serious effects that flooding can have in a number of areas of the country. Before commenting on the specific points raised by my hon. Friend, it may be helpful if I explain how flood defence matters are handled.
The Ministry of Agriculture, Fisheries and Food has policy responsibility for the alleviation of flooding—whether by rivers or by the sea—and for the protection of the coastline against erosion. The Ministry sets broad national priorities and my hon. Friend will not be surprised to learn that these give greatest emphasis to the protection of life and hence, generally speaking, to the protection of urban areas.
Secondly, the Ministry also makes substantial sums of grant aid available each year to the various local bodies that carry out flood and coastal defence capital works. In the current financial year, grant aid provision amounts to some £62 million. That grant aid covers, on average, about half the capital costs of the schemes, the remainder being raised locally and reimbursed through the revenue support grant. Thirdly, the Ministry gives guidance on the engineering, environmental and economic factors that bodies responsible for carrying out flood defence works should take into account.
My hon. Friend, who has a detailed knowledge of these matters, will be aware that responsibility for the design, construction, maintenance and operation of flood defences in particular locations lies at local level. Schemes are undertaken by local authorities, by internal drainage boards or—in the case of our major rivers—by the National Rivers Authority. In the case of Mimmshall brook, to which my hon. Friend referred, responsibility for flood defence works rests with the N RA's Thames region.
It is those local bodies that decide whether to put forward proposals for flood defence works to the Ministry for grant aid. Although the Ministry's regional engineers


can and do give advice to the NRA and other local bodies on the need for works, the Ministry cannot direct an authority to undertake particular flood alleviation measures.
In considering applications for grant aid, the Ministry expects the local flood defence authority concerned to have examined a wide range of options for tackling flooding at a particular site and to have compared those options with the implications of taking no action whatever. In effect, the "no action" scenario provides a benchmark against which the relative advantages and disadvantages of public investment to resist the forces of nature can be judged.
Proposals for flood defence work are considered first by the Ministry's regional engineers for the relevant area, who have the necessary professional expertise. Essentially, there are three yardsticks against which all such proposals must be judged: planned schemes must of course be sound in engineering terms; they must be environmentally acceptable; and they must be economically worth while.
Naturally, as I told my hon. Friend earlier, the protection of life remains the overriding priority. Subject to that imperative, it is essential that all proposed flood defence works should meet the three criteria that I have mentioned. The economic yardstick applied is that a scheme is regarded as economically worth while if the benefits flowing from it—for example, in terms of physical damage or other detriment avoided—are at least equal to, or greater than, the costs of undertaking the work.
I hope that my hon. Friend, who holds strong and sensible views on financial prudence—stronger, almost, than those of any other Conservative Member—will agree that that is an essential safeguard to the interests of the taxpayer. The resources that the Government devote to flood and coastal defence, although very substantial, are of necessity finite. It is therefore right that expenditure should be focused primarily on areas of dense urban settlement, where the economic, social and environmental costs of flood damage are greatest.
Even in such areas, schemes can generally only reduce the incidence of flooding; they cannot hope to prevent it altogether. Nevertheless, in the majority of such cases, the costs of carrying out flood defence will be comfortably outweighed by the resulting benefits, but in cases where the costs of a proposed scheme are in excess of the benefits that would accrue, the investment of public money cannot be justified unless there is imminent risk to life. The Ministry's financial support for flood warning schemes is, of course, a direct response to the need to avoid risk to life.
I accept that it is very difficult to put precise figures on all the costs and benefits of particular schemes, and my hon. Friend made a very powerful case tonight. But the Ministry makes every effort to quantify so-called intangible benefits of schemes—for example, the social or environmental benefits to which my hon. Friend referred tonight—and to take account of them in its decision making, even where they cannot be quantified.
I hope that my hon. Friend will agree that, although it may have been rather long-winded, it was worth my setting out at some length the principles to which my Department has to work.
I come now to the particular problems of the residents of Warrengate road and the Mimmshall brook near North Mimms in my hon. Friend's constituency. As my hon. Friend said with such clarity and force, the area has a history of flooding problems, and that is probably an understatement. The resolution of those problems poses particular difficulties, of which my hon. Friend is well aware from his correspondence with the chairman of the NRA, Lord Crickhowell.
Given the serious threat of recurrent flooding, along with the technical and other difficulties attending the possible solutions to it, the authority was right to embark upon a detailed study of the whole of the Mimmshall brook catchment. That thorough analysis was completed only in the last day or so, and my Department and my hon. Friend—I know because we spoke on the telephone about it—have received a copy of it.
The Ministry's river and coastal engineers are carefully considering the NRA's study as a matter of urgency, but I hope that my hon. Friend will accept that I am truly not in a position tonight to tell him what conclusions they are likely to draw.
However, I am aware that the report considers a wide range of possible options for dealing with my hon. Friend's constituents' serious problems, and that one of those at least appears to be broadly consistent with the rules to which the Ministry has to work and which I have outlined.
My hon. Friend and I must look to the NRA in the first instance to consider the options that it has now identified locally and to present formal proposals to the Ministry in support of its preferred course of action. I can give my hon. Friend and his constituency my guarantee that any such proposals will be handled by the Ministry's engineers as a matter of the highest priority.
In conclusion, I assure my hon. Friend and his constituents that we do not underestimate the grave seriousness of the problem that he has rightly brought to the Floor of the House tonight. As I have said, I fully appreciate the concerns of those affected and I, with my right hon. Friend the Minister, have expressed our deepest sympathy and concern for the care and safety of the residents in the light of the distress that they have endured.
I hope that my hon. Friend will agree that the solution is not straightforward, black and white or easy. The engineering and economic complications involved must be fully addressed. I hope that he will agree that I have been entirely open about the procedures that we are obliged to follow.
My Department is ready to act quickly to assess any formal proposal from the NRA when it comes. In doing so, we shall take into account the points that my hon. Friend has raised in reaching future decisions on this most difficult and distressing case.
Once again, I congratulate my hon. Friend on securing this debate, and on representing his constituents' interests with vigour and clarity in a robust speech, which I greatly value, having had the opportunity to reply. I assure the House that we shall do everything that we can to assist my hon. Friend's constituents.

Question put and agreed to.

Adjourned accordingly at twenty-eight minutes past Ten o'clock.